5th July 2013
House prices have jumped by almost 4 per cent in the past year marking the highest rise for almost three years according to the latest figures from Halifax writes Philip Scott.
Growing confidence in the housing market and the economy, combined with a shortage of properties for sale, appear to be driving up costs with the annual growth rate in the three months to June, 3.7 per cent higher than in the same period last year.
In addition prices in the three months to June were 2.1 per cent higher than in the first three months of 2013, edging above the 1-2 per cent range recorded throughout the first five months of the year. This was the biggest increase on this measure since January 2010, at 2.9 per cent. Prices increased by 0.6 per cent in June, the fifth consecutive monthly rise.
Martin Ellis, housing economist, at Halifax says: “Activity has also improved in recent months. Both home sales and mortgage approvals for house purchase – a leading indicator of sales – increased in May.
“Improved confidence in both the housing market and the economy, combined with a shortage of properties available for sale, appear to be pushing up house prices. The Funding for Lending Scheme is also likely to be boosting the market by helping to reduce mortgage rates.
“There are also early indications that the Help to Buy: equity loan scheme may be stimulating demand. Despite these signs of improvement in the market, the still subdued economic background and weak income growth are expected to remain significant constraints on housing demand and activity during the second half of 2013.”
Commenting on the data, Howard Archer, chief UK and European economist at IHS says: “For the time being, we are sticking to our view that house prices will see solid but limited increases over the rest of 2013 and then strengthen more markedly in 2014.
“We believe that a strong upward move in house prices is unlikely for now given a still challenging and uncertain economic environment despite recent signs of improvement. In particular, very weak earnings growth argues against a substantial rise in house prices for the time being while consumer confidence is still limited compared to long-term norms despite the recent improvement.”