It shows the fragility of the housing market recovery as different lenders show prices rising and falling, but only by marginal amounts so there is some stability in the housing market.
Just a few days the Nationwide reported in its monthly index data that prices increased by 0.4% in July and annual property price growth edged up to 3.5%. Meanwhile one set of data said that prime property prices in central London are still falling and another showed a slight rise.
Both the Halifax and the Nationwide show that the average home price is now nudging £200,000. Today’s data from the Halifax put it at £198,883. The Halifax index also shows that sales increased by 5% between May and June.
Confidence in the outlook for house price growth remains substantially higher than at the beginning of 2015, according to Stephen Noakes, managing director of retail customer products at the Halifax.
He believes that the market is robust, pointing out that house prices in the three months to July were 2.4% higher than in the previous quarter. However, this measure of the underlying rate of house price growth has eased and annual house price growth also declined, to 7.9% from 9.6% in June and is at its lowest since December 2014.
‘The underlying pace of house price growth remains robust notwithstanding the easing in July. Continuing economic recovery, earnings growth in excess of consumer price inflation and very low mortgage rates all underpin housing demand,’ said Noakes.
‘Supply is highly restricted with the stock of homes available for sale falling further to new record lows. This combination of well supported demand and tight supply is likely to ensure that house price growth remains relatively strong in the near term,’ he added.
He also pointed out that the Halifax housing market confidence tracker shows that confidence in the outlook for house price growth hit its highest level in four years following the general election in May, but dropped back in June.
Price Optimism (HPO) hit +68 in May 2015, and although it slipped back slightly in June to +64, it remains substantially higher than at the beginning of 2015 when it was +52.
Jonathan Samuels, chief executive of Dragonfly Property Finance, pointed out that despite the fall in prices during July, house prices overall are still rising. ‘The dominant narrative within the UK property market continues to be weak supply and strong demand,’ he said.
He explained that demand is strong because of mortgage rates being at record lows, more people in work, low inflation and a generally positive economic outlook, however, the increasing likelihood of an interest rate rise in the not too distant future has the potential to recalibrate demand and the market as a whole.
‘After so many years of 0.5% rates, even a symbolic 0.25% rise could materially affect demand. It could bring the market crashing back to reality with a large thud or borrowers will take it in their stride. How the market adjusts to the interest rate upcycle is the great unknown,’ he said.
Alex Gosling, chief executive of online estate agents HouseSimple, pointed out that it is the first drop in average house prices since February but he believes prices are still generally on a steady upward trend.
‘There appears to be cautious optimism although this is somewhat overshadowed by a looming interest rate rise. The market is seeing buoyant activity with mortgage approvals bouncing upwards but stock is at a record low with three successive months of slippage in available homes for sale,’ he said.
‘Without more home building quickly coming on stream, we are in danger of another painful year ahead for those wanting to take their first step onto the housing ladder,’ he added.
