House price growth eased ahead of EU vote: Halifax

According to the latest Halifax House Prince Index, house prices in the three months to June were 1.2% higher than in the preceding three months - an easing of growth before the EU referendum took place.

Related topics:  Finance News
Amy Loddington
7th July 2016
house growth graph this is actually the green one

This was slightly below May’s 1.5% increase and was the lowest rise on this basis since December 2014 (1.0%).

House prices increased by 1.3% between May and June. This followed a 0.9% rise in May. The month-on-month changes can be erratic and the quarter on quarter change is a more reliable indicator of the underlying trend.

The introduction of higher stamp duty tax rates for buy to let and a second home in April has had a substantial impact on house sales in recent months. A rush to complete sales ahead of the tax change caused a sharp rise in March, which was followed by a substantial decline in April. UK home sales stabilised in May, rising slightly (1.5%). Sales of 89,700 in the month, however, remained 16% below the average over the six months to February (106,750).

 Mortgage approvals rose modestly in May, with the stamp duty change also affecting mortgage approvals in recent months.The volume of mortgage approvals for house purchases – a leading indicator of completed house sales – increased by 1.3% between April and May. Nonetheless, approvals in the three months to May were 6% lower than in the preceding three months.

Martin Ellis, Halifax housing economist, said:

“There is evidence that the underlying pace of house growth may be easing. House prices in the three months to June were 1.2% higher than in the previous quarter; down from 1.5% in May. The annual rate of growth fell from 9.2% in May to 8.4%; the lowest since July 2015.

“House prices continue to increase, albeit at a slower rate, but this precedes the EU referendum result, therefore it is far too early to determine any impact since.”

Jeremy Duncombe, Director, Legal & General Mortgage Club, comments:

“As predicted, house prices have eased slightly in the weeks leading up to the EU referendum. However, we will only start to see the true shape of the new landscape when next month’s indices are released.

“Despite the many unknowns, the fundamentals of the market are still strong. Borrowers need to know that lenders still have the money to lend, and that mortgages are still available for potential buyers.

“The uncertainty we’re seeing in the mortgage market makes it even more important for borrowers to seek professional advice. An experienced broker will ensure they are receiving the best deal available for their specific needs, allowing them to realise their dream of homeownership, or their need to remortgage, regardless of the current uncertainties.”

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