Wading through the statistics
House prices fell by 0.5 per cent in August, continuing the gradual downward trend of the past 12 months, according to the latest Halifax house price index. The average house in the UK is now valued at £161,132. This means that house prices have risen by 0.1 per cent over the past three months but fallen by 2.3 per cent when comparing the three months to September 2010 with the three months to September 2011.
Howard Archer, Chief UK & European Economist for IHS Global Insight said: “The further fall in house prices reported by the Halifax in September ties in with our belief that house prices are headed downwards over the coming months. We currently see house prices falling by around 5% by mid-2012.”
2011 has seen a mixed set of values found by the Halifax. So far there have been four monthly rises, four falls and one month when prices were unchanged. The Halifax report noted some signs of extra activity in the housing market. Actual sales have remained steady throughout the year, close to 70,000 sales per month on a seasonally adjusted basis. Mortgage approvals increased for the fourth consecutive month in August, to 52,400, according to figures from the Bank of England. This was the highest number since December 2009.
However, one analyst said that the level of transactions means that it is difficult to pinpoint dominant trends. Alex King, a director of mortgage broker, SPF Private Clients, said: “For short-term prices to be said to be trending in one direction or another, you need a certain critical mass of data that simply isn’t there at present. “Low interest rates, cheap mortgage finance and, in many areas, a shortage of homes are propping up prices while weak consumer confidence and reduced disposable incomes are causing people to sit on their hands.
“The result is a cancelling out and a property market that is essentially in limbo - unsure of its direction. Steady employment levels and historically low mortgage rates have supported the housing market. Employment levels rose by 24,000 in the three months to July 2011, compared with the same period a year earlier. Mortgage interest payments as a percentage of disposable income are at their lowest levels since 1997. They currently take up 26 per cent of a household’s disposable income, compared to 48 per cent in mid 2007 and well below the average of the last 25 years, 37 per cent.
Commenting, Martin Ellis, housing economist, said: “The more volatile monthly figures showed a 0.5% decline in prices in September. This continued the mixed monthly picture experienced so far this year with four rises, four falls and one no change since January. This mixed pattern is consistent with a market where prices are lacking genuine direction.
“Greater uncertainty about economic and personal financial circumstances, together with pressure on householders’ finances from weak earnings growth, higher inflation and increases in taxes, are likely to be constraining housing demand.” Use the Myfinances.co.uk comparison tables to find the best ideal on a new mortgage.
