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Heat in summer housing market expected to cool down

by: Samantha Partington
  • 08/09/2014
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Heat in summer housing market expected to cool down
The price of UK property grew by 3% in the three months to August, figures from the Halifax house price index have revealed, although there have been warnings about future growth prospects.

Annually, prices were 9.7% higher in the three months to August than the same period last year but this growth rate was slower than the quarterly (3.5%) and annual price rises (10.2%) seen in July.

Halifax’s housing economist Martin Ellis said that while demand for property is being supported by growth in employment, consumer confidence and low mortgage rates, market forces were emerging which were acting as a drag on house price inflation.

Home sales have remained broadly stable so far this year while the number of new buyer enquiries fell marginally in July. This is the first decline since January 2013.

Meanwhile new sales instructions and second-hand homes coming on to the market increased for the second successive month, according to figures from RICS.

Construction data showed new homes completions in England increased by 6% between the first and second quarters of 2014 and the total during April-June 2014 was 7% higher than in the same period last year

Ellis said: “…earnings growth that remains below consumer price inflation, and the prospect of an interest rate rise at some point over the coming months, are likely to curb demand.

“These trends, if sustained, should help to improve the balance between supply and demand, contributing to an easing in the pace of house price growth.”

As well as an increase in new and second-hand homes coming on to the market seasonal factors will tip the scales further in favour of buyers over the coming months.

Guy Meacock of buying agency Prime Purchase said: “On balance the next few months will be the time to buy a home rather than sell.

“Vendors who want to exchange by Christmas are coming to market at an unfashionable time of year and may need to be more flexible on the price if they want to meet that deadline. Prices are already softening so there are good opportunities for buyers.”

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