House prices stuck in a rut, says lender

Sunday, 09th October 2011

House prices are unlikely to rise or fall much for the rest of 2011, claims one of the UK’s largest mortgage lenders.

The Halifax’s latest home price survey shows prices have tumbled 2.3 per cent since September last year, but nudged down just 0.5 per cent from August and 0.1 per cent since the end of June.

These changes are just blips and represent a standstill in the market.

Prices are falling at a lesser rate than earlier in the year as well – the annual fall in the 12 months to August was 2.6 per cent against a 4.2 per cent difference between May 2010 and May this year.

The average house price is £161,132. Values have fluctuated from a peak of £164,949 in October last year to a low of £160,393 in April over the past 12 months.

Martin Ellis, the lender’s housing economist, said: “House prices between July and September were slightly higher than April to June.  The 0.1 per cent increase between the two quarters was the first quarterly rise since the beginning of 2010.

“The more volatile monthly figures showed a 0.5 per cent decline in prices in September.  This continued the mixed monthly picture experienced so far this year with four rises, four falls and one no change since January.  This mixed pattern is consistent with a market where prices are lacking genuine direction.”

Despite the lack of confidence in the economy, the Halifax feels this has masked better job prospects and low interest rates bolstering the housing market and preventing prices from falling further.

“Greater uncertainty about economic and personal financial circumstances, together with pressure on householders’ finances from weak earnings growth, higher inflation and increases in taxes, are likely to be constraining housing demand,” said Ellis.

“Despite these pressures, low interest rates and a rise in employment over the past year, have been supporting the market, resulting in broad stability in both prices and activity.  We expect little change over the remainder of this year.”