UK house prices up for seventh month in a row, latest data shows
House prices in the UK in the three months to the end of August were 2.1% higher than the previous quarter, the same rate of increase as in both June and July, according to the latest property index.
The figures from the Halifax, also shows that on an annual basis prices in the three months to August were 5.4% higher than in the same three months a year earlier, the highest annual rate since June 2010 when it was 6.3%. It was also higher than July's 4.6% increase and the annual rate has picked up from 1.1% in March 2013.
On a monthly basis prices were up 0.4% in August, the seventh consecutive monthly increase, taking the average price of a home to £170,231.
‘Housing market activity is also on an upward trend with the number of mortgage approvals for house purchases, a leading indicator of completed house sales, 10% higher in the three months to July compared with the previous quarter after allowing for seasonal influences,’ said Martin Ellis, housing economist at the Halifax.
‘Economic improvement and low interest rates, supported by official schemes such as Funding for Lending and Help to Buy, appear to have boosted housing demand in recent months. Nonetheless, relatively modest economic growth and below inflation rises in earnings are likely to act as a brake on the market,’ he explained.
But he did add that overall, house prices are expected to rise gradually over the remainder of the year as activity has risen as well. For example, the number of mortgage approvals for house purchases, a leading indicator of completed house sales, increased by 4% between June and July, to 60,600, the first time that approvals have exceeded 60,000 since early 2008.
Approvals in the three months to July were 10% higher than in the preceding three months and the relatively low level of mortgage payments in relation to income is supporting housing demand. Typical mortgage payments for a new borrower, both first time buyers and home movers, at the long term average loan to value ratio, accounted for 27% of disposable earnings in the second quarter of 2013, its lowest proportion since the second quarter of 1999 and comfortably below the average of 36% over the past 30 years.
Ellis also pointed out that more properties are coming on to the market. Whilst demand has increased more quickly than supply, surveyors have reported a rise in the number of home owners providing instructions in each of the last six months.
Further improvements in the availability of properties for sales could help to bring demand and supply into better balance, constraining the upward pressure on prices, he believe