UK house prices up after lull in April and forecast to remain steady
08-06-2012
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House prices in the three months to May were 0.8% higher than in the preceding three months the biggest three monthly increase since August 2011 when it was 0.9%.
On a monthly basis, house prices increased by 0.5% in May. This follows the significant monthly rises and falls recorded in the previous two months of growth 2.2% in March and a fall of 2.3% in April.
Prices in the three months to May were 0.1% lower than in the same period a year earlier. This continued the improving trend in the annual rate and was the smallest yearly decline in house prices for 17 months which was the 1.2% fall in October 2010.
The UK average price in May 2012 was 0.7% higher than in December 2011, at £160,941 and home sales fell by 18% between March and April, providing further evidence that the expiry of the stamp duty holiday for first time buyers at the end of March encouraged some to bring forward their house purchases to beat the deadline. Nonetheless, sales were still 3% higher than in April 2011.
The Halifax reports that housing market conditions have tightened slightly since the end of 2011. The supply/demand balance in the market, as measured by the ratio of house sales to the stock of unsold properties, has tightened a little in recent months. This modest improvement in market conditions has probably helped to support house prices.
‘House prices in the three months to May were 0.8% higher than in the previous quarter, marking the second successive increase in this measure of the underlying trend. The more volatile monthly figures showed a 0.5% rise in May following April's 2.3% decline,’ said Martin Ellis, Halifax’s housing economist.
‘Whilst there has been a modest improvement in the trend for house prices recently, the current average UK price is very similar to the levels both a year ago and at the beginning of this year. We expect this situation to continue with prices likely to still be around today's levels at the end of 2012 as the ongoing tough economic environment constrains housing demand,’ he explained.
‘Recent monthly house sales figures have clearly been affected by the ending of the stamp duty holiday for first time buyers in late March. Overall, the trend for sales, like that for prices, appears to be one of broad stability,’ he added.
Peter Rollings, chief executive officer of estate agent Marsh & Parsons agreed that after the trauma caused by the end of the stamp duty holiday for first time buyers, national house prices seem to be steadying.
‘An April lull was inevitable after many buyers brought forward purchases into March, but the last few weeks have seen an improvement on a national level, in spite of a fairly dismal mortgage market and a misfiring economy. We are back in the new norm for the housing market, characterised by historically low levels of transactions and largely static sales prices,’ he said.
‘Until the mortgage market gets back on track, and first time buyer numbers can return to a semblance of their pre-crunch level, short term gains in national house prices will continue to be driven by the more buoyant, equity rich parts of London,’ he added
