You are here: Home - News -

House prices static for first time in 5 years

by:
  • 01/08/2000
  • 0
By Ben Marquand Figures from the Halifax and Nationwide show that the UK housing market slowed consi...

By Ben Marquand

Figures from the Halifax and Nationwide show that the UK housing market slowed considerably in the second quarter of the year.

The monthly report into regional house prices by the Halifax records no change in house prices, the first time they have not risen since 1995. This indicates that the housing boom is now past its peak, but the lender expects a period of steady growth for the second half of the year rather than a dramatic fall in prices.

It also shows marked differences in regional prices. The housing market continues to remain buoyant in the South East, although there has been a fall in prices in London and other regions. However, the average price of a house in London still remains 72% higher than the national average.

Martin Ellis, group economist at the Halifax, said the fall in London prices appears to have been caused by the preceding period of sharp rises, which made it difficult for potential purchasers to enter the market. The falls elsewhere are a reflection of the problems faced by manufacturers due to the high level of sterling.

He said: “The service sector, which is based mainly in the South East, is doing well, but manufacturing is still struggling. This is reflected in the housing market, where the weaknesses of the sector are a problem for the regional economies.”

There has been a noticeable decline in house price inflation since the first quarter. The Halifax has seen the rate fall sharply on a monthly basis, according to Ellis. In January it was 16% and in June it had fallen to 9.2%.

The regions where house prices are lowest tend to be those in which tax relief makes up a greater proportion of the mortgage, noticeably in Scotland, Wales and northern England. Ellis said this can be explained by two factors – the four interest rate rises between September and February and the abolition of mortgage interest tax relief.

Nationwide also expects that annual house price inflation will continue to decline over the year. David Parry, the society’s divisional director, planning, said: “House price inflation appears to have peaked and is set to moderate further over the rest of the year. We acknowledge that the recent slowdown could intensify and if it does, then we will consider revising our house price forecasts down in coming months.”

He added that the current pricing gap between London and the South and the rest of the UK is unlikely to be sustainable as house price growth slows in the South but remains firm in the North and Midlands.

Ellis believes prices are unlikely to plummet, although he is not prepared to rule out another small fall. He said: “The market should do well over the rest of the year as the economy is still in good shape, unemployment levels are still falling and interest rates are unlikely to rise any further.”

Tags

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
Buy-to-let market likely to remain buoyant

The buy-to-let market is set to keep expanding for the foreseeable future, according to the results ...

Close