The latest figures from the UK’s two largest lenders have revealed that house prices are continuing to rise. But while the Halifax reported the largest growth since the start of the year Nationwide saw a much smaller rate of increase in September.
Halifax said prices rose by 1.6% in September, bringing the price of the average UK house to a seasonally adjusted £86,304. This is the third successive monthly rise in house prices following four successive monthly declines. The lender has also seen the annual rate of house price inflation leap from 7.4% in August to 9.2% in September. However, it remains well below the 16% peak recorded in January. Halifax does not expect this rise to herald a return to rapid house price inflation, and predicted a rate of 4.0% by the final quarter of 2001.
Martin Ellis, group economist at Halifax, said: “Overall, the latest monthly figures suggest the housing market has stabilised following the sharp slowdown earlier this year.”
These figures contrast with those released by Nationwide Building Society which saw the price of the average house rise by just 0.4% to £80,672. At 10.2%, Nationwide’s annual rate of house price inflation is, however, higher than Halifax’s estimate although its forecast for the year has been revised down from 11% to 7%.
David Parry, divisional director at Nationwide, said: “Between January and March this year prices rose by over 6% and if this had continued then the risk of a serious or sudden slowdown would have grown. Essentially, the stable pattern of prices over the past five or six months reflects a return to a sensible market trend, with sustainable growth in sight.”
Nationwide attributes the slowdown to a decrease in the number of first-time buyers, who are increasingly being priced out of the market. To purchase their first home in London the average buyer would now need to earn £34,000, compared with £27,000 a year ago.
Parry added: “The number of mortgage approvals for home loans has also reduced greatly and suggests that house sales will remain relatively flat over the coming months.”