Is the housing market stabilising or slowing down?
House prices increased by 0.6 per cent in July, according to Halifax, although the lender believes the housing market is slowing down.
The average house in the UK is now worth £167,425. In June, Halifax data showed that prices had fallen by 0.6 per cent. ‘Overall, there has been little change in prices during 2010 so far. The mixed pattern of monthly rises and falls over the first seven months of the year is consistent with a slowing market,’ says Martin Ellis, housing economist at Halifax.
He adds that he believes house prices will be broadly unchanged over 2010 as a whole. On the one hand the abolition of home information packs in May has increased the number of properties for sale, but on the other, low interest rates and a recovering economy are underpinning demand and continue to support the market. This means house prices will remain flat this year, according to Halifax.
Meanwhile Nationwide data released last week showed that house prices actually fell in July, and the building society said prices will either remain flat this year or continue to decline this year.
However, David Smith, senior partner at property consultancy Carter Jonas, says today’s figures from Halifax confirm that there is a ‘stabilisation in the property market rather than, as some have suggested, the beginnings of a sharp correction’.
He believes there is a two-tier market with rising prices and strong demand for expensive properties, while at the lower end of the market ‘concerns over the economy and difficulties securing mortgage finance are far more material’ resulting in sluggish prices.
‘Recent price volatility [as seen in Halifax’s data] is not the beginning of a sharp decline but rather a reaction to the price rises of the past year, constrained mortgage finance, increased supply and a still uncertain economy,’ Smith stresses.
Indeed the Assetz House Price Watch, an amalgamation of the five major UK indices – CLG, Nationwide, Halifax, Acadametrics and Rightmove – shows that house prices are now only 6.8 per cent below their October 2007 peak.
Stuart Law, chief executive of Assetz, says: ‘The latest Halifax data shows the UK housing market is back on track following a dip in June as buyers and sellers took stock post-Budget.
‘Similarly, the latest Assetz House Price Watch reveals strong annual house price growth of 7.2 per cent, with house prices now just 6.8 per cent below their October 2007 peak, rubbishing suggestions that the market is guaranteed to falter in the second half of this year.’
‘I still expect to see a modest 5 per cent overall growth for 2010 as the positives continue to outweigh the negatives.’