Shortage of property for sale keeping UK prices high, latest index data suggests

Taylor Scott International News

House prices in UK in the three months to April were 2.2% higher than in the preceding three months, according to the latest data from the Halifax. This particular measure of the underlying rate of house price growth fell for the first time in 2015 following three successive rises. But house prices increased by 1.6% between March and April. In contrast, annual house price growth increased slightly, from 8.1% in March to 8.5% but, nonetheless, the annual rate remains in the narrow range of 8% to 9% where it has been since the start of 2015 and is below last July’s peak of 10.2%. ‘Housing demand is being supported by a number of factors including economic improvement, rising employment and low mortgage rates. At the same time, supply remains very tight with a general shortage of properties available for sale,’ said Halifax housing economist Martin Ellis. ‘This combination has kept house price inflation steady in recent months with prices increasing by 2.2% to 2.6% on a quarterly basis and at an annual rate of 8% to 9%,’ he added. He pointed out that house prices are continuing to increase more quickly than average earnings despite the return to real earnings growth over the past few months. ‘The resulting rise in the level of house prices in relation to earnings should constrain house price growth and activity over the remainder of the year,’ he said. Ellis is predicting that the annual rate of house price growth is forecast to end the year at somewhere between 3% and 5%. The Halifax report points out that home sales were unchanged in March at 101,000 and were also static between the final three months of 2014 and the first quarter of 2015, but were 6% lower than in the first three months of 2014. Mortgage approvals have risen on a quarterly basis. The volume of mortgage approvals for house purchases, a leading indicator of completed house sales, fell slightly in March following three consecutive rises. Nonetheless, approvals during the first quarter of 2015 were 2.8% higher than in the final quarter of 2014. Supply remains tight. New instructions fell in March continuing the recent downward trend with declines in seven of the past eight months. This fall in instructions has contributed to the supply of homes on the market remaining low. Continue reading →

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