"Housing demand is being supported by an economy that continues to perform well with employment still expanding"
House prices rose by 0.1% between January and February. This followed January’s 1.1% decline.
According to Halifax, mortgage affordability is significantly better than a decade ago up, 18 percentage points since 2007. Typical mortgage payments for new borrowers (both first-time buyers and homemovers) at the historic average loan to value ratio stood at 30% of earnings in 2016 Quarter 4 compared to the peak of 48% in 2007 Quarter 3.
Housing Activity
Total UK home sales on a recent upward trend. Sales in January were 4.9% higher than in December 2016; the fourth successive monthly increase. At 104,820, sales were the highest since March 2016 when transactions were dramatically boosted ahead of the introduction of higher stamp duty rates on second homes and buy to let purchases. In annual terms, sales in January 2017 were almost identical to those in January 2016.
Supply remains very low. The number of properties coming on to the market for sale fell in January after holding broadly steady over the previous three months. This indicator has now failed to increase for 11 successive months. As a result, average stock levels on estate agents’ books remain close to historic lows.
Housebuilding fell by 1% in 2016. New housing completions in England were estimated at 35,980 (seasonally adjusted) in the final three months of 2016. This was 4% lower than in the previous quarter, and 2% below their level in the same quarter in 2015. Overall, completions in 2016 were 1% lower than in 2015. Completions were 43% above their recent trough in the first quarter of 2013, but remain 26% below their recent peak in the first three months of 2007.
Martin Ellis, Halifax housing economist, said: “House prices in the three months to February were 1.7% higher than in the previous quarter; down from 2.3% in January. The annual rate of growth fell to 5.1% from January’s 5.7%, the lowest since July 2013.
Housing demand is being supported by an economy that continues to perform well with employment still expanding. Meanwhile, the supply of both new homes and existing properties available for sale remains low. This combination is pushing up prices.
The annual rate of house price growth has, however, nearly halved over the past 11 months. A sustained period of house price growth in excess of pay rises has made it increasingly difficult for many to purchase a home. This development, together with signs of reduced momentum in the jobs market and squeezed consumer spending power, is expected to curb house price growth during 2017.”
