International Property

UK house prices rising amid shortage of properties, says Halifax

PUBLISHED : Tuesday, 12 September, 2017, 10:37am
UPDATED : Tuesday, 12 September, 2017, 7:28pm

British house price growth picked up last month, underpinned by strong employment growth and a shortage of properties on the ­market, according to the country’s biggest mortgage lender.

The average price of a house rose 1.1 per cent to £222,293 (US$293,029) in August, Halifax said. Prices in the three months to August were 2.6 per cent higher than a year earlier, up from 2.1 per cent in the three months to July, which was a four-year low. Annual price growth has slowed from a peak of 10 per cent in March last year.

“Recent figures for mortgage approvals suggest some buoyancy may be returning, possibly on the back of strong recent employment growth, with the unemployment rate falling to a 42-year low,” Halifax said.

“However, wage growth is still lagging increases in consumer prices, which is likely to add pressure on household finances and increase affordability challenges for some buyers. House prices should continue to be supported by low mortgage rates and a continuing shortage of properties for sale over the coming months.”

It said British home sales had exceeded 100,000 for seven months running. Between June and July, they edged up to 104,760, the highest level since March last year, HMRC figures showed.

The short-term impact of Brexit on the market was probably overestimated but the longer­- term effects may have been underestimated
Jeremy Leaf, property agent

Jeremy Leaf, a property agent and a former residential chairman of the Royal Institution of Chartered Surveyors, warned against being carried away by the Halifax figures.

“It is worth remembering that house price growth is being underpinned by a shortage of supply, historically low mortgage rates and relatively low unemployment, rather than strong ­demand. Fewer transactions are taking place where affordability has been most stretched,” he said.

“The short-term impact of Brexit on the market was probably overestimated but the longer­- term effects may have been underestimated.”

Samuel Tombs, an economist at Pantheon Macroeconomics, said the pickup “should not be mistaken for underlying momentum”, noting that Halifax’s measure rose just 0.1 per cent on a three-month-on-three-month basis.

“Demand has weakened recently as the real wage squeeze has intensified and consumer confidence deteriorated. We expect demand to weaken further this year as the real wage squeeze worsens and lenders follow through on plans to tighten lending criteria,” Tombs said.