House prices in the latest three months (February-April) were 2.2% higher than in the preceding three months. The quarterly rate of change decreased for the first time this year following three consecutive rises and compares with 2.6% last month.
Prices in the three months to April were 8.5% higher than in the same three months a year earlier. This was slightly higher than March’s 8.1% but kept the annual rate within the narrow range of 8-9% where it has been throughout the past seven months with the exception of December (7.8%). The annual rate remains below the recent peak of 10.2% in July 2014.
Home sales in the UK remained at 101,000 in March. Sales were also static between the final three months of 2014 and the first quarter of 2015, but were 6% lower than in the first three months of 2014. (Source: HMRC, seasonallyadjusted figures)
The volume of mortgage approvals for house purchases – a leading indicator of completed house sales – fell slightly in March following three consecutive rises. Nonetheless, approvals during the first quarter of 2015 were 2.8% higher than in the final quarter of 2014.
New instructions fell in March continuing the recent downward trend with declines in seven of the past eight months. This fall in instructions has contributed to the supply of homes on the market remaining low.
Martin Ellis, housing economist, said:
"House prices in the three months to April were 2.2% higher than in the preceding three months. This measure of the underlying rate of house price growth fell for the first time in 2015 following three successive rises. In contrast, annual house price growth increased slightly, from 8.1% in March to 8.5%.
"Nonetheless, the annual rate remains in the narrow range of 8-9% where it has been since the start of 2015 and is below last July’s peak of 10.2%.
“Housing demand is being supported by a number of factors including economic improvement, rising employment and low mortgage rates. At the same time, supply remains very tight with a general shortage of properties available for sale. This combination has kept house price inflation steady in recent months with prices increasing by 2.2-2.6% on a quarterly basis and at an annual rate of 8-9%.
“House prices are continuing to increase more quickly than average earnings despite the return to real earnings growth over the past few months. The resulting rise in the level of house prices in relation to earnings should constrain house price growth and activity over the remainder of the year. The annual rate of house price growth is forecast to end the year at 3-5%.”
Jeremy Duncombe, Director, Legal & General Mortgage Club, commented:
“Although house price rises are slower than they were last year, they are still rising faster than inflation. A big part of this problem is we are not building enough homes to keep up with demand which means house prices are pushed up.
"The new Government have pledged to build more homes prior to the General Election and it is vital that they deliver on this promise. We need around 250,000 new homes to be built each year to keep up with demand. At the moment we are well below this level so it needs to be at the top of the political agenda as we go into the next parliament.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau, added:
“The Halifax data shows the housing market continued to see strong levels of growth in the final months before the election, with prices in the three months to April 8.5% higher than a year ago. While the rate of growth has slowed slightly since the turn of the year, low mortgage pricing and the improving economy has continued to stimulate demand from would-be buyers.
“With construction having dipped in recent months, the limited supply of new homes is helping to underpin prices. House price growth is still outstripping wages, and the new government will face a big challenge to deliver greater housebuilding over the course of the next parliament.
“We may be looking at a swifter conclusion to post-election negotiations than many people would have expected as a result of last night’s vote. Many modest earners will now be waiting expectantly to see how quickly measures emerge that will ease the affordability issues in the housing market.”
