UK house prices rising faster than wage increases, Halifax says

Thursday 16th August 2018 03:13 EDT
 

Halifax has cited a surprise spike in UK house prices in July, which has in turn increased the annual rate of property inflation to 3.3 per cent. It said house prices rose 1.4 per cent in July alone, taking the average house price to a new record of £230,280. The annual growth rate jumped from 1.8 per cent in June to 3.3 per cent in July, the largest increase since last November. Halifax said house prices are being supported by the underlying strength in the jobs market, with employment rising by 137,000 in the three months before May.

London agents James Pendleton said, “Annual growth just exploded to a level not seen since the autumn. With two negative quarters behind us, many were hoping the usually busy summer period would produce a bit of a bounce, and this is a promising start.” However, Halifax said that transaction activity “remains soft” and that it expected the number of mortgage approvals to be broadly flat during 2018. Economists said the July figures from Halifax should be treated cautiously. Howard Archer, the chief economic adviser to the EY Item Club said, “We remain doubtful the UK housing market is stepping up a gear. Activity is still relatively lackluster despite coming modestly off 2018 lows, with consumer conditions challenging.”

The bank figures for July are significantly higher than those reported by its rival lender nationwide. It recorded a rise of 0.6 per cent in July compared with Halifax's 1.4 per cent figure. Its figure for annual house price inflation is 2.5 per cent. Next month's figures will be the first to reflect the impact of the rise in Bank of England base rate to 0.75 per cent although few property experts are expecting a significant impact given that most households are on fixed rates. Jonathan Harris of Anderson Harris said, “We don't expect this month's interest rate rise on its own to have too much of an impact. However, it may cause some nervousness going forward as buyers worry about the possibility of future rate rises. It is no surprise then that fixed-rate mortgages continue to be by far the most popular product as borrowers look to protect themselves against future uncertainty.”


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