Halifax says increase adds £1,200 to the value of a typical home, with the average house price now at £213,472
House prices inched up 0.6% in May, largely cancelling out a fall the previous month and adding £1,200 to the value of a typical home, according to the Halifax.
At £213,472, however, the average house price is less than £1,000 higher than it was in January, and the mortgage lender predicts a slowdown in price growth as the year progresses.
The Halifax previously reported that property prices fell by 0.8% in April as buy-to-let purchasers disappeared from the market following a rise in stamp duty on second homes. May’s 0.6% rise has largely offset that fall.
The annual rate of property price growth is unchanged at 9.2%, the lowest figure since November 2015. It was running at more than 10% in March.
Martin Ellis, the Halifax’s housing economist, said: “Low interest rates, increasing employment and rising real earnings continue to support housing demand. The strength of demand, combined with very low supply, is causing house prices to rise at a brisk pace in quarterly and annual terms.”
He added, however, that increasing affordability issues, caused by a sustained period of higher-than-earnings house price growth, should curb demand over the coming months.
Jeremy Leaf, a former chairman of the Royal Institution of Chartered Surveyors and a north London estate agent, said the looming EU referendum meant it was difficult to conclude too much from these figures.
“Once the vote is out of the way and the result is in, hopefully the market will settle down again very soon after. At the moment the uncertainty means people are holding off making decisions,” he said.
“Who is going to decide to buy a property if they don’t know whether they are going to get that pay rise or even be laid off, depending on the outcome of the referendum?”
Jeremy Duncombe, the director of the Legal & General Mortgage Club, said that some might view rising house prices as something to cheer about, but “this relentless climb is actually bad news for aspiring homeowners across the country.
“There must be a genuine focus from the government and the industry to address the supply-demand imbalance that remains the underlying cause of our housing crisis,” he said.
“We need to see a house-building revolution in this country, and that means building at least 250,000 new homes a year. If we don’t, our children could be the first in many generations to find that the prospect of homeownership is unachievable.”
SOURCE: The Guardian
