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Property monitor - February

Monday, 12 Feb 2007 23:01

House price growth could be beginning to slow Printer friendly version

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InTheNews.co.uk take a look at the most recent property price indicators to let you know the current state of the British housing market.

The British housing market continues to show signs of slowing down as three interest rate rises in five months begin to take their toll.

High demand and limited supply have ensured strong conditions going into 2007, however, with mortgage lending figures in particular indicating that the market is continuing on regardless.

Apart from the Halifax house price index's (HPI) substantial acceleration in January, most of the monthly indicators suggest a slowing of overall growth following seasonal slips in activity during the festive period.

Whether these reflect a slight resurgence in the market or a disparity with December's figures characteristic of a slowing market remains to be seen.

Below is a selection of the main house price indices and borrowing figures designed to show the current state of the British property market, along with each resident expert's take on the future of house prices in Britain.

Halifax HPI

January: Up 1.3 per cent month-on-month, up 9.9 per cent year-on-year. Monthly rise follows one per cent fall in December.

"The mixed pattern of monthly price rises and falls in December and January is consistent with a slowing market," Halifax's chief economist, Martin Ellis, said.

Nationwide HPI

January: Up 0.3 per cent month-on-month, 9.3 per cent year-on-year. Lowest monthly rise for eight months.

"It is likely that we will now begin to see a weakening in demand as a result of stretched affordability and rising interest rates," Fionnuala Earley, Nationwide's group economist, predicted.

Rightmove HPI

January: Up 0.5 per cent month-on-month, up 13.5 per cent year-on-year. Monthly rate fall does not stop overall annual rise.

"The reason house prices are defying the gravity of a six-year high in interest rates is because the number of new households is growing by 50,000 a year, more than the supply of new build," Miles Shipside, commercial director at Rightmove, explained.

Hometrack HPI

January: Up 0.4 per cent month-on-month, six per cent year-on-year Prices remain unchanged across 72 per cent of country.

"Above average house price growth in London may have put a gloss on the headline figure," Richard Donnell, Hometrack's director of research, said.

Land Registry

December 2006: Up 0.7 per cent year-on-year, 7.8 per cent month-on-month. Average house on the UK market currently priced at £173,717.

Department for Local Communities and Government (DCLG) HPI

November: Annual house price inflation at 8.9 per cent, up from 8.6 per cent in September. Growth in last quarter up to 8.5 per cent from eight per cent. Sales of larger houses cause growth.

"In the home countries in November, England, Wales and Northern Ireland saw increases in inflation, while inflation fell in Scotland," the DCLG stated.

Royal Institute of Chartered Surveyors (Rics) housing market survey

December: 37 per cent more chartered surveyors reported rise rather than fall, down from 46.9 per cent in November. House price inflation cools following November rate rise.

"Interest rate rises have started to cool the housing market and last week's rise will have a further impact in the coming months, but the market remains strong," Rics spokesperson Jeremy Leaf said.

British Bankers' Association (BBA) mortgage lending

December: Gross mortgage lending of £18.1 billion, up seven per cent year-on-year. Slip on November's record £21.4 billion in line with seasonal average.

"The final quarter of last year, despite seasonally lower activity in December, showed the mortgage market to be stronger than at the same time a year earlier," the BBA's director of statistics, David Dooks, forecast.

Council of Mortgage Lenders (CML) mortgage lending

December: Gross mortgage lending of £29.4 billion down 11 per cent month-on-month but up eight per cent year-on-year. Gross lending hits new monthly record – again.

"The commentators who thought the housing market would crash in 2006 were wrong. Last year the market proved itself to be in robust shape and we expect it to remain so during 2007," Michael Coogan, CML director-general, commented.