Tight housing supply saw average house prices in the United Kingdom in the three months to May 2015 rise by 2 percent compared with the preceding three months, according to the latest Halifax House Price Index.
Martin Ellis, Housing Economist, said: “Annual house price growth rose marginally from 8.5 percent in April to 8.6 percent in May, and continued to be in the narrow range of between 8 and 9 percent where it has been throughout 2015 so far.
“Housing supply remains extremely tight with the stock of properties available for sale currently at its lowest level for many years. At the same time, ongoing economic recovery, increasing employment, real earnings growth and very low mortgage rates are all supporting housing demand.
“This combination has kept annual house price inflation well above earnings growth although activity levels are subdued.”
He summarised that the imbalance between supply and demand is likely to continue to push up house prices over the coming months.
“Looking further ahead, the increasing level of house prices in relation to earnings is expected to dampen house price growth,” he added.
The number of sales fell during April. U.K. home sales dropped by 3.4 percent between March and April to 97,020 nonetheless, sales in the three months from February to April were marginally higher (+1.3 percent) than in the preceding three months.
Mortgage approvals continued to pick-up. The volume of mortgage approvals for house purchases – a leading indicator of completed house sales – increased by 9.9 percent during April.
Whilst approvals in the three months to April were 6.6 percent higher than in the preceding three months, they were 4.3 percent lower than in the same three months a year ago according to Bank of England figures.
Supply remains tight. The stock of homes available for sale fell further in April and is currently at its lowest level for many years, according to Halifax. New instructions declined in April for the eighth month in the last nine, contributing to the very low levels of supply.
There was a notable increase in those thinking that now is a good time to buy. The latest Halifax Housing Market Confidence Tracker showed the net proportion of consumers who believe the next 12 months will be a good time to buy increased from +21 in March to +26 in April. In contrast, the net proportion that thinks that the next year will be a good time to sell fell from +33 to +30.
The headline House Price Outlook balance (i.e. the difference between the proportion of people across Britain that expect the average property price to rise less the proportion who think it will fall) fell to +58 in April from +64 in March 2015.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
