House price growth has slowed yet again, to 5.2% on an annual basis, according to the latest House Price Index from Halifax.
Quarter-on-quarter, prices rose by just 0.1%. However, this is a slight improvement on last month’s decrease of 0.1%. The quarterly rate of growth has dropped from a peak of 3% in February.
Average house price
Following a monthly change of 1.4% between September and October, the average house price now stands at £217,411.
House Price Growth Slows Again to 5.2%
October’s 5.2% rate of growth is the lowest annual increase recorded since July 2013 (4.6%), reports Halifax.
However, the monthly rise seen in October marks the second consecutive month of growth.
Property market activity
Home sales have broadly stabilised over the past few months. Despite monthly fluctuations, sales have largely plateaued in recent months following the distortions seen earlier in the year, caused by the rush to complete on purchases ahead of the introduction of higher Stamp Duty for additional properties.
Nevertheless, home sales in the third quarter (Q3) were 8% lower than the same period last year, indicating an overall softening in activity.
Mortgage approvals have also steadied, reports Halifax. The volume of mortgage approvals for house purchases – a leading indicator of completed sales – rose in September; the first monthly increase for four months.
Overall, the amount of approvals seems to have broadly stabilised over the last three months, albeit at a lower level than a year ago. Approvals in Q3 2016 were 12% lower than in Q3 2015.
The bank also reports that supply remains historically low. Housing stock was largely flat over the three months from July to September, but remains around the lowest levels ever recorded.
The Housing Economist at Halifax, Martin Ellis, comments: “House prices in the three months to October were largely unchanged compared with the previous quarter. The annual rate of growth continued on its recent downward trend, easing to 5.2%.
“Activity levels, like house price growth, have softened compared with a year ago. Home sales, however, appear to have stabilised in recent months, following the distortions earlier in the year due to the changes to Stamp Duty in April.”
He continues: “Annual house price growth has nearly halved from a peak of 10% in March this year, but remains robust at 5.2%. This expected slowdown appears to have been largely due to mounting affordability pressures, which have increasingly constrained housing demand. Whilst house price growth may ease further in the coming months, very low mortgage rates and a shortage of properties available for sale should help support price levels.”
The Co-Founder and Director of online mortgage lender LendInvest, Ian Thomas, also responds to the index: “October has seen a flattening out of house price growth, with a real effect of the Stamp Duty changes feeding through to reduced market demand. This is something that we are seeing the industry call on the Government to address in the upcoming Autumn Statement and housing white paper publication.
“Many are forecasting that the property market may see a slowdown, as the uncertainty around Britain’s withdrawal from the European Union impacts on customer confidence.”