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Home arrow News arrow Surprise increase for UK house prices in November

Surprise increase for UK house prices in November

Thursday, 06 December 2012
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UK house prices increased by 1% in November compared with the previous month but overall this year there has been little movement in the residential market, according to the Halifax.

Its latest index published today (Thursday 06 December) also shows that on a quarterly basis prices are down 0.7% taking the average home price to £160,879. On an annual basis prices are down 1.3%.

‘There has been very little change in house prices overall during the past year with the average UK price in November almost identical to that in November 2011,’ said Martin Ellis, Halifax housing economist.

‘Both demand and supply pressures in the market have altered little during the course of 2012, and this has been the key reason for the lack of anything other than modest changes in house sales and prices at a national level compared with a year ago,’ he explained.

he pointed out that challenging economic conditions have constrained housing demand whilst low interest rates have helped to support affordability and demand but there are signs that the Funding for Lending Scheme (FLS) is helping to reduce mortgage rates and may be contributing to the recent pick-up in mortgage approvals, adding that FLS should help to ease credit constraints, resulting in some improvement in mortgage availability in 2013.

But he expects little change for the UK housing market next year. He predicts prices to remain within 2%, up or down, of where they are now.

He also expects the Bank of England Bank Rate to remain at its historic low of 0.5% throughout 2013 which is likely to be characterised by subdued economic growth, sustained high unemployment and pressures on household finances that will constrain housing demand.

House prices are likely to continue to be strongest in London and the South East and are likely to rise, albeit very slowly, beyond 2013 as the economy strengthens.

‘Conditions in the housing market have been largely unchanged over the past 12 months with little overall movement in either house prices or sales for the second consecutive year. This stability is remarkable given the poor domestic economic climate and the considerable uncertainty regarding the prospects for both the UK and world economies,’ said Ellis.

‘Both demand and supply pressures in the market have altered little during the course of 2012, and this has been the key reason for the lack of direction in either sales or prices at a national level,’ he added.

Paul Hunt, managing director of Phoebus Software, believes the housing market is taking steps forward on the back of increasing competition in the mortgage market. ‘The stuttering economy and adverse funding conditions are still significant hurdles for lenders to clear, but the Funding for Lending scheme is providing the basis for improvement,’ he said.

‘We’ve already seen more and cheaper mortgage deals hit the market, and as the scheme gains momentum in the New Year, we should see even more competitive rates reach a growing pool of borrowers, which will help underpin house prices,’ he added.


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