Halifax property price index reports rise in July as mixed messages besiege the UK property market

Last month’s increase reversed the 0.6% fall in June reported by the Halifax and it shows just how up and down the market is at present.
 
A few days ago Nationwide reported that prices had fallen 0.5% in July and Knight Frank’s Prime Central London Index for July showed that prices for prime London property fell in July by 0.5%, the first monthly decline since March 2009.
 
Martin Ellis, housing economist at the Halifax, said that overall, there has been little change in prices during 2010 so far and the mixed pattern of monthly rises and falls over the first seven months of the year is consistent with a slowing market.
 
‘It is also in line with our view that house prices will be broadly unchanged over 2010 as a whole,' he added.
 
The Halifax index also shows that the year on year increase in house prices fell to 4.9% in the three months to July from 6.3% in May and a peak of 6.9% in April. The average price of a UK house now stands at £167,425, slightly below where they were at the end of 2009 but 8.3% above their April 2009 low point.
 
Analysts believe that one month’s figures do not give an idea of what is really happening in the market. ‘House prices are notoriously volatile on a month to month basis and can also be from survey to survey,’ said Howard Archer of IHS Global Insight. He added that the July survey did not fundamentally alter his view that house prices will ease back towards the end of 2010 and are likely to soften slightly in 2011.
 
The increase in the number of properties for sale over the past few months, boosted by the recent abolition of HIPs, has relieved much of the pressure that was driving up prices in 2009, according to Ellis. ‘Low interest rates and a recovering economy, however, are underpinning demand and continue to support the market,’ he added.
 
In separate research Halifax has found that the total value of privately owned housing stock in the UK more than doubled over the past decade. There was a 118% increase from £1,719 billion in 1999 to an estimated £3,755 billion in 2009. During the same period, the retail price index rose by 29%.
 
However, since 2007 the value of housing stock in the UK has declined by 8%. This reflects the reduction in house prices between mid 2007 and early 2009. The improvement in house prices in 2009 saw housing value grow by an estimated 2% during the year, it says.
 
Meanwhile Britain’s second biggest house builder, Taylor Wimpey, is warning that the housing market will stay sluggish for some time. The group, which has returned to profit, said that maximising margins by raising selling prices rather than seeking to accelerate volume growth helped to boost half year results
 
Taylor Wimpey added that the housing market had been ‘relatively robust’, despite the uncertainty surrounding the election and the overall economy. ‘We are running the business with a pretty cautious mindset. We wouldn’t expect things to take off in 2011 with a strong increase in sales and prices,’ said chief executive Peter Redfern.