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Housing market ‘directionless’ with annual price growth at 2.7%

Written by: Victoria Hartley
House price growth dropped 0.1% in the quarter to March and house buying and selling activity has softened overall in the last 12 months.

But the average house price reached its highest ever level at £227,871, after a 1.5% monthly rise in March, with mortgage rates at their most affordable level for a decade.

Typical mortgage payments accounted for less than a third of homeowners’ disposable income in Q4 of 2017 compared to almost half or 48% in Q4 2007.

Russell Galley, managing director, Halifax, said: “Mortgage approvals are down compared to 12 months ago, while home sales have remained flat in the early months of the year. This lack of direction in the housing market is in stark contrast to the continuing strength of the UK jobs market.”

Galley confirmed the unemployment rate is now the joint-lowest since 1975 and in the three months to January there were 402,000 more people in work compared to a year earlier.

“In the coming months we expect price growth to remain close to our prediction of 3% despite the very positive factors of continuing low mortgage rates, great affordability levels and a robust labour market. The continuing shortage of properties for sale will also support price growth.”

House prices increased by 1.8% annually in February, which Halifax said was underpinned by lack of supply and the low mortgage rates.

Danny Belton, head of lender relationships, Legal & General Mortgage Club, said: “There might be talk of a slowdown in the property market, but the reality is that house prices are still rising – just at a much healthier rate.

“For first-time buyers in particular, this should be seen as particularly good news – prices are stabilising, and mortgage rates remain close to all-time lows, so now is a good opportunity for these buyers to get their feet firmly on the housing ladder.”

Brian Murphy, head of lending for Mortgage Advice Bureau said: “The report by the Halifax suggests the UK housing market is ticking over steadily, with house price growth mainly unchanged on the previous quarter.

“The month-on-month increase of 1.5% now suggests an all-time high in terms of average house price, and overall the data would seem to indicate that the market is so far performing to expectations this year, including the annual forecast released by the Halifax for 2018 at the end of last year.”

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