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Halifax: Annual house price growth drops to 4.9%

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  • 04/08/2010
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Halifax: Annual house price growth drops to 4.9%
The housing market continues to show signs of slowing, with Halifax reporting that annual house price growth fell to 4.9% in July from 6.3% the previous month.

Yearly property price inflation, which Halifax measures by the average of the last three months against the same period last year, has tailed off significantly from the recent high of 6.9% in May.

The fall came despite the month of July seeing a modest increase of 0.6%, offsetting the fall of 0.6% in June.

The average property price is now £167,425; 16% below its August 2007 peak. Prices in July are marginally lower than the end of 2009, but have still risen 8.3% on their April 2009 trough.

Martin Ellis, housing economist for Halifax, said: “Overall, there has been little change in prices during 2010 so far. The mixed pattern of monthly rises and falls over the first seven months of the year is consistent with a slowing market. It is also in line with our view that house prices will be broadly unchanged over 2010 as a whole.

“The increase in the number of properties for sale over the past few months, boosted by the recent abolition of HIPs, has relieved much of the pressure that was driving up prices in 2009.”

He added: “Low interest rates and a recovering economy, however, are underpinning demand and continue to support the market.”

Housing market activity was broadly stable in July, with Bank of England figures revealing that the number of mortgages approved in the three months to June were 2% higher than the previous quarter. Nevertheless, activity is significantly down on the market’s peak, with approvals 56% lower in Q2 2010 than Q2 2007.

Typical mortgage payments have dropped on the back of low mortgage rates, falling from a peak of 48% of disposable earnings in Q3 2007 to 30% in Q2 2010.

In separate research, Halifax has found that the total value of privately owned UK housing stock has more than doubled in the past decade, up 118% from £1.719bn in 1999 to an estimated £3.755bn in 2009.

During the same period, the retail price index rose by 29%.

However, since 2007 the value of housing stock in the UK has declined by 8%, reflecting falling house prices. Yet, the improvement in house prices over 2009 has seen housing value rebound by 2% during the year.

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