October UK real estate prices wiped out September’s gain on interest rate fears, according to new figures from the Halifax, producing a ‘small stutter’, says the boss of Hudsons agency
After the lowest property sales for a year, UK real estate prices fell 0.4% in October, wiping out September’s gains, according to the latest data from the Halifax bank.
The average “standardised house price” reached £186,135, which is up 8.8% year-on-year, but around £700 lower than September’s £186,898 and is the fifth monthly fall this year.
House prices fell by 0.4% between September and October. This is the fifth monthly decline in the past year.
The Halifax says buyers who require mortgages are worried about probable interest rate rises, but Jonathan Hudson Managing Director of leading London agency, Hudsons, says the results show a “small stutter”.
Housing Economist, Martin Ellis, says, “House prices in the three months to October were 0.8% higher than in the preceding three months. This was the third consecutive decline in the quarterly rate of increase and the smallest rise since December 2012. Annual price growth in the three months to October slowed to 8.8% from 9.6% in September.
“Activity continues to decline with mortgage approvals in September falling for the third successive month to a 14 month low, whilst home sales are at their lowest level since October 2013. The associated weakening in demand has brought supply and demand into better balance.
“The economy is, however, continuing to grow at a healthy pace and employment is still rising. These factors should support housing demand over the coming months. However, while the chances of an imminent interest rate hike may have receded, a recent Halifax survey found that many borrowers are concerned about the impact a rise could have on their monthly mortgage repayments over the next 12 months. This concern is likely to curb buying intentions.”
Mr Hudson says the Halifax figures are very general for the market as a whole, and are taken from completions which could have been agreed anywhere from two to six months before.
“Yes, there have been small drops since the springtime high on some properties, but some properties are still achieving substantial prices.
“Basically, it feels like the market has had a small stutter. While buyers are getting used to the new MMR ruling on mortgage affordability and while some have their eye on the general election in May, I would say these figures represent the mood in the market. People are still buying, but only sellers with a reason for moving are accepting offers below the headline rate being achieved in the early part of the year, meaning only small (less than 0.5%) falls for the last quarter.
“The market quietens down towards the year end, but sales are still agreed and completed, so I would predict much of the same for the rest of the year.”
According to separate quarterly Halifax data, seasonally-adjusted house price growth in Greater London from July-September 2014, was up 20.7% year-on-year and 7% on Quarter 2, with the average home price at £355,630.
The UK standard price was a little higher than in October at £186,741, up 9.6% annually and 2.7% quarterly.
House price data on a quarterly basis provides the clearest indication of overall market trends, smoothing out the monthly volatility caused by the reduced number of monthly transactions used to calculate all house price indices, the Halifax says.
By Adrian Bishop, Editor, OPP Connect