UK House Prices are Cooling With the Seasons

9th September 2014 posted in Sellers

House prices have been steadily increasing throughout 2014, but a new report from Halifax shows that more homes are coming onto the market and prices have slowed down to a 0.1% rate of increase in August.

The average house price was up 10.2% in July, compared to the previous year and had then slowed to 9.7%, with houses across the nation costing on average £186,270. In August 2013, the average house cost £170,224.

Halifax said in their report that there were tentative signs that the supply and demand balance would become more balanced, which would help to really slow down the speed of price growth.

Martin Ellis, Halifax housing economist, said:

"These trends, if sustained, should help to improve the balance between supply and demand, contributing to an easing in the pace of house price growth."

Mr Ellis also thinks that the prospect of rising interest rates in the next few months will be putting people off buying a new house. The Halifax house price index has been very up and down this year, with 5 price rises recorded and 3 price drops.

Rival lender Nationwide, however, reported a 0.8% month on month price increase in August, compared with just a 0.2% increase in July. The Land Registry data then showed a different set of data altogether, with the average property rising in price by 1.7% - that’s £100 a day.

Howard Archer from the HIS Global insight said that the data released by Halifax tied in with their predictions that although house prices would continue to price over the next few months, it would be at a much slower rate.

"Buyer interest is likely to stay relatively healthy even if it has come off peak levels,” he said. “As it should be supported by elevated consumer confidence, markedly rising employment, and still low mortgage interest rates (even if they start to rise by early 2015, they will still be very low compared to past norms). It is also currently being supported by the Help to Buy initiatives."

House price inflation was originally driven by the soaring property market in London and around the commuter belt, but it now seems to be cooling down. Experts say that although housing prices are slowing down in the capital, across the rest of the country the housing market continues to increase.

House prices have been rising faster than wages have and Halifax’s house price-to-earnings ratio currently stands at 5.01 –the last time it was higher than this was during the property boom in the 2000s.

Experts are predicting that the rest of the country is now going to start playing catch up with London, bridging the gap that been slowing widening between the north and south of the country.

Savills have predicted that by the end of 2014 prices in London will have increased by 15% - nearly double what was originally predicted. It also forecasts that figure will drop down to 5% in 2015 and flatten out completely in 2016.

There have been improvements seen in terms of housing supply recently, as there are more new homes and an increased number of second hand properties coming onto the market. This should really help to keep the house prices across the country at a sustainable level.

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