Figures released by two of the UK’s largest lenders may leave brokers and their clients perplexed about the current state of the housing market.
While Halifax’s latest house price index stated that the housing market “was not as buoyant as a month ago”, predicting that the market will now cool down as house price inflation slows, the Nationwide reported another large rise in house prices and advised homebuyers to take a cautious view.
According to the Nationwide, house prices rose by 1.6% in April, a rate of £50 of a day, bringing the average price to just over £80,000, while the Halifax’s average property was almost £85,000 with a price increase of only 0.8%.
The Halifax said: “Overall, the figures over the past few months suggest that the underlying pace of house price growth is easing, providing evidence that the risk of the housing market overheating is receding.”
It said that this was backed up by Inland Revenue statistics that revealed the number of house sales fell in February and March.
But David Parry, divisional director of planning at the Nationwide, said: “Recent evidence suggests that activity in the UK housing market remains robust, with mortgage approvals 20% higher in the year to February. The number of house sales, which typically lags approvals by between one to three months, are likely to edge higher in coming months.”
He added, however, that current levels of house price inflation are not sustainable and by late summer a gradual slowdown could begin as momentum in the South East reduces.
Research from the Royal Institution of Chartered Surveyors (RICS) took a similar stance to Halifax and said that London and the South East were beginning to show signs of a slowdown. It said that an increase in the number of properties on surveyors’ books was acting to contain further upward pressure on prices.
RICS spokesman Ian Perry said: “With an increase in the number of properties available, the recent frenetic rate of increases will slow. But the economy and employment prospects are strong, so there is little risk of a late 1980s-style bust.”
Neither Nationwide or Halifax could provide an answer as to why their results were so different. Both said that while Halifax is often thought to have a northern bias and Nationwide a southern basis, average house prices eliminates this argument.
Alex Bannister, group economist at Nationwide, said: “There is no easy answer to why this divergence occurred. Both sets of research are based on similar methodology and a similar basket of properties.”
