UK house prices up 2.6% in first quarter of 2015, latest index shows

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UK house prices were 2.6% higher in the three months of 2015 than in the previous quarter but the annual rate of growth is still falling. The latest index from the Halifax shows that annual price growth fell slightly from 8.3% in February to 8.1% in March, taking the average price of a home to £192,970. The quarterly rate of change increased for the third consecutive month. It is now at a similar rate to September 2014 when it was 2.7%, prior to a marked slowdown in the last three months of 2014. The data also shows that house prices increased by 0.4% between February and March, offsetting February’s 0.4% fall. According to Halifax’s housing economist Martin Ellis the recent return to real earnings growth for the first time in several years, very low mortgage rates and last December’s stamp duty changes are supporting housing demand. ‘The rising level of house prices in relation to earnings should, however, curb house price growth and activity,’ he added. He also predicts that the annual rate of house price growth, which has continued to ease in the first quarter of 2015, is forecast to end the year at 3% to 5%. The index report also points out that housing supply remains tight. According to figures from the Royal Institution of Chartered Surveyors new instructions fell again in February suggesting that the trend remains down following January’s modest rise, which was the first increase in six months. However, house price optimism rebounded in February as inflation continued to fall and the expectation of an interest rate rise receded further, according to the Halifax Housing Market Confidence Tracker. Ellis said that this optimism is reflected in the outlook for both buyers and sellers, with buying sentiment up to its highest level since the Confidence Tracker launched in 2011 at net +35. At the same time, selling sentiment reached an all-time high and now stands at +27. The report also mentions the regional differences in stamp duty. Some 81% of residential stamp duty revenue raised in the UK in 2013/2014 was in the four regions of southern England; Greater London, South East, South West and East of England, according to the HMRC. This was significantly higher than their 71% share in 2007/2008 when total stamp duty revenues were at a similar level at £6.68 billion in 2007/2008 against £6.45 billion in 2013/2014. London alone contributed 42% of all UK stamp duty revenues in 2013/2014 compared with 28% in 2007/2008. Indeed, London was the only region to see an increase in revenues between 2007/2008 and 2013/2014. Continue reading →

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