Halifax House Price Index
07 September 2006
Source: HBOS
All Houses, All Buyers Index (1983=100)
Index (seasonally adjusted) 579.5 Monthly Change 1.0% Annual Change 8.2% Standardised Average Price (seasonally adjusted) £179,043
• House prices rose by 1.0% in August. There are signs, however, that house price growth continues to moderate. The overall increase in house prices over the three months from May to August is only 0.2% compared with a 2.9% rise in the preceding three months.
• In addition, the annual rate of house price inflation eased to 8.2% from 9.4% in June. This pattern is expected to continue over the coming months.
• The market is underpinned by sound fundamentals. A number of developments are nonetheless expected to constrain housing demand and moderate house price inflation over the remainder of 2006. Further substantial increases in utility bills will put pressure on householders' finances.
• Recent mortgage rate increases – both fixed rates and following the Bank of England's increase last month - are likely to dampen housing demand. We expect the annual rate of house price inflation to ease to 5% by the end of 2006.
• Housing market activity is firm. The number of loans approved for house purchase in the three months to July 2006 is up 24% compared with the same period a year earlier, according to the latest Bank of England figures. There is, however, evidence that activity has reached a plateau with the latest RICS survey reporting little change in completed property sales in July for the third consecutive month.
ABOUT THE HALIFAX HOUSE PRICE INDEX
The Halifax House Price Index is the UK's longest running monthly house price series with data covering the whole country going back to January 1983. The Index is typically based on around 15,000 house purchases per month, and covers the whole calendar month. From this data, a 'standardised' house price is calculated and property price movements on a like-for-like basis (including seasonal adjustments) are analysed over time. Properties over £1 million are included and the index is seasonally adjusted with the seasonal factors updated monthly.
Commenting, Martin Ellis, Chief Economist, said:
'House prices rose by 1.0% in August. There are signs, however, that the market is slowing with an overall increase in house prices over the three months from May to August of only 0.2% compared with a 2.9% rise in the preceding three months.
August's increase was smaller than the 1.4% rise in August 2005, contributing to a slowdown in the annual rate of house price inflation to 8.2% from 9.4% in June. We expect this trend to continue over the coming months with the annual rate easing to 5% by the end of the year.'
Sound fundamentals continue to support the market…..
The UK economy has strengthened during 2006 with the latest ONS figures confirming that GDP increased by 0.8% in 2006 Q2. This was the biggest quarterly gain for two years and was above the long-term historical average of 0.6%. Consumer spending growth accelerated from 0.3% in 2006 Q1 to 1.0% in Q2.
Employment continues to increase with a rise of 42,000 in the three months to June 2006. The total number in employment has increased by 240,000 over the past year to 28.9 million.
Signs that activity is levelling out……
Housing market activity remains firm with the number of loans approved for house purchase in the three months to July 2006 up 24% compared with the same period a year earlier, according to the latest Bank of England figures. There is, however, evidence that activity has reached a plateau with the latest RICS survey reporting little change in completed property sales in July for the third consecutive month.
…but increasing constraints on demand are set to cause house price inflation to ease
The further substantial increases in utility bills that have been recently announced are expected to put pressure on householders' finances, curbing housing demand and cau
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