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Annual House Price Growth at Lowest Rate for 5 Years

Rose Jinks - November 8, 2018

Annual house price growth recorded in October is at the lowest rate for five years, according to the latest House Price Index from Halifax.

The report shows that the average house price rose by 1.5% in the three months to October, compared to the same months last year. This has slowed from the 2.5% rate of growth recorded in September, and the lowest rate seen since March 2013.

On a quarterly basis (August-October), house prices were an average of 0.2% higher than in the preceding three months (May-July).

Annual House Price Growth at Lowest Rate for 5 Years

Annual House Price Growth at Lowest Rate for 5 Years

Month-on-month, the average property value increased marginally by 0.7% in October, following two consecutive monthly declines. The typical UK house price is now £227,869.

Housing activity

In the three months to September (for which the latest data is available), home sales were unchanged from the previous three months, Halifax also reports. The volume of residential transactions has been broadly flat over the past year, and is likely to remain so in the coming months.

Bank of England industry-wide figures also show that the number of mortgages approved to finance home purchases – a leading indicator of completed sales – dropped by 1.3% month-on-month, to 65,269, in September.

Respondents to the Royal Institution of Chartered Surveyors monthly UK Residential Market Survey continue to cite the mixture of affordability constraints, a lack of stock, economic uncertainty and interest rate rises as barriers to housing market activity. The lack of new instructions coming to market continues to impede activity, with new instructions down for the second consecutive month.

Comments 

Russell Galley, the Managing Director of Halifax, comments on the latest report: “The annual rate of house price growth has fallen from 2.5% in September to 1.5% in October, which is the lowest rate of annual growth since March 2013. However, this remains within our forecast annual growth range of 0-3% for 2018.

“House prices continue to be supported by the fact that the supply of new homes and existing properties available for sale remains low. Further house price support comes from an already high and improving employment rate, and historically low mortgage rates, which are creating higher rates of relative affordability. We see this continuing to be the case over the coming months, and we remain supportive of our 0-3% forecast range.”

The CEO of online estate agent Housesimple.com, Sam Mitchell, also responds to the data: “Although the annual rate of growth slowed last month, house prices did tick upwards in October.

“With house prices in London and the South East stalling, we can attribute this rise to some degree to the buoyant markets we’re seeing in the North West and Yorkshire.

“The north-south divide has been turned on its head, as more affordable homes, a strong jobs market, thriving start-up business hubs and a plethora of new homes being built draw buyers to the area.”