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Halifax: housing market stable

Halifax: housing market stable

Thursday, 3 August 2006 12:00 AM

The Halifax house price index reported today that house prices went up 0.2 per cent in July 2006, following declines in May and June.

The bank says this mix of monthly price rises and falls is a typical feature of a more stable housing market.

The rise last month puts Halifax's annual housing market growth figure up to 8.8 per cent, and the average price of a property at £177,020, compared to £176,509 in June (full story).

Additionally, the strengthening UK economy and improved buyer confidence gave the housing market more momentum than expected in the first half of 2006.

Halifax also predicted more growth for homeowners, moving their forecast from three per cent to five per cent - a forecast below the long-term average of eight per cent, but in line with the reported increase for 2005.

The housing market's stability is underpinned by a strengthening economy, high employment levels and low interest rates, reports Halifax.

The annual rate of house price inflation, however, is expected to ease, partly because the corresponding figures for last year were strong.

Pressure on householders' finances from rising utility bills and council tax going up, and the speculation of higher interest rates, are also likely to moderate demand, causing house price inflation to decline.

The number of loans approved for house purchases was down two per cent in the second quarter of 2006 compared with the first quarter, on a seasonally adjusted basis, according to the latest Bank of England figures, which Halifax predicts should mean that annual house price growth falls during the second half of 2006.

A continuation of these developments, together with the much stronger pattern of house price growth in the second half of 2005 compared with the first half, should mean that annual house price growth falls during the second half of 2006.