Halifax: UK House Price Inflation

Halifax: UK House Price Inflation

Halifax HPI: Monthly House prices rise 1.5%, but Year on Year gains are are down to 1.9%
Adrian Adrian

House prices increased on a month on month basis by 1.5% pulling back some of the previous months decline, but the housing market remained subdued as both quarterly and annual inflation numbers start to fall back, with yearly gains just 1.9% higher than a year ago, which is a big contrast to previous highs in recent years. 

The Bank of England shows the number of mortgages approved to finance purchase fell 0.6%, which is the third consecutive fall, with the quarterly approvals dropping 1.9% showing further declines in housing activity.  Supply still remains low, but appears to be stabilizing, potentially showing more people will be looking to sell as the potential for further declines in prices and Interest rates rises put increased pressure on the market.   Quarterly sales also dropped by 1.6%, reflecting the sharp slowdown.

It's worth noting that as activity declines, monthly figures can be more volatile as better quality housing stock tends to sell quickly giving the impressions of rises in a falling market, also the numbers don't break down by region, so price increases in other areas of the country (especially areas that haven't been so affected by the massive HPi inflicted on the southern parts of the country) can counter falling prices elsewhere and falls in the London markets have started to become far more apparent and widespread.

Interest and mortgage rates are still historically low, which has been a leading factor in maintaining high prices and has been raising questions of how sustainable these rises will be in the coming months/years ahead.  Also, you have to question the motivations of the BoE, with inflation still above targets and fuel/oil prices on the rise, GBP struggling to maintain value and FTSE 100 close to all time highs, are they trying to keep prices high at the expense of the wider economy?

Recommended reading : Do stable economies lead to instability and bubbles?

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  • https://static.halifax.co.uk/assets/pdf/mortgages/pdf/May-2018-House-Price-Index.pdf