Homeowners are not concerned about how potential interest rate rises will affect their ability to meet their monthly mortgage repayments, according to the latest Housing Market Confidence Tracker from Halifax.
The report arrives at the same time as Halifax’s latest House Price Index, for April 2018, which found that the average house price last month was 2.2% higher than in the same period last year. This annual rate of growth is down from 2.7% in March.
On a quarterly basis, house prices were 0.1% lower than in the preceding quarter, marking the third consecutive decline on this measure.
Month-on-month, the average house price dropped by 3.1%, following a 1.6% rise in March. This reflects the volatility in the short-term monthly measure, Halifax reports. The average UK house price is now £220,962.
Housing market activity
At the same time as publishing its monthly House Price Index, Halifax has released figures on housing market activity in March.
The data shows that UK home sales fell by 7.2% between February and March, to 92,270 – the lowest level since May 2016 (88,680). Since the end of last year, home sales have averaged 97,000 per month.
Homeowners not Concerned about Potential Interest Rate Rises, Halifax Reveals
Industry-wide figures from the Bank of England (BoE) indicate that the number of mortgages approved to finance a home purchase dropped for the second consecutive month in March, to 62,914 – a decrease of 1.4%. Approvals in the three months to March were 1.7% higher than in the preceding quarter, further indicating a subdued residential market.
The stock of homes available for sale edged up in March, however, it remains close to record lows, while new instructions declined for the 25th month in succession, contributing to the very low levels of supply.
Active housing demand is also subdued, with new buyer enquiries falling for the 12th consecutive month in March.
The latest Housing Market Confidence Tracker from Halifax shows that optimism in the market remains at a five-year low, echoing the subdued house price performance and activity levels since the end of last year.
This is, albeit, set against a positive outlook for the majority of consumers, who believe that house prices will rise over the next 12 months. Indeed, fewer people are now predicting a decline in house prices compared with six months ago.
The survey also reveals that potential BoE base rate increases are not a major concern for homeowners, with less than a third worried about the possibility of rising interest rates affecting their ability to meet their monthly repayments.
Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, responds to the data: “This sudden batting collapse in the monthly figures has knocked more than £7,000 off the price of the average home, as the market continues to be starved of life. It’s true that monthly figures are more volatile, but you mustn’t ignore the body of evidence that surrounds them either.
“We’ve now witnessed three consecutive falls in the quarterly figures, the amount of new consumer borrowing quite literally collapsed in March in an ominous sign of tightening purse strings, home sales are at a two-year low and the number of new instructions has fallen for the 25th month in a row.
“Whether or not this is a market being pulled in different directions remains to be seen. Short-term volatility can be ignored to a certain extent, but less so when it confirms what a great many other indicators are telling you.
“This slowing is already apparent across much of London, where prices have already begun falling, but that has been good news. First time buyers are celebrating a more sensible medium-term trajectory, as they stand a greater chance of getting on the housing ladder, while agents have been praying for price corrections, as they know it’s the only way transaction levels will begin to recover.
“Otherwise, what you’re left with is a stand-off, with dwindling numbers of buyers and sellers being able to agree a fair price. It’s the housing market equivalent of wringing out a wet towel, and this one is nearly dry.”