House price rises driven by chronically low supply – Halifax
Data from the lender showed house prices grew on a monthly, quarterly and annual basis during the last month, continuing the trend begun in August.
Halifax added that it believed a much-anticipated rise in the Bank of England Base Rate would not have a significant effect on transaction volumes.
The average house price stood at £225,109; up 0.8% compared to August, 1.4% on the previous three months (April to June) and by 4% compared to September 2016.
However, data from the Royal Institute of Chartered Surveyors (RICS) continues to show that properties available for sale remain at chronically low levels. It is this shortage of properties which is driving price rises.
Halifax managing director, Russell Galley, said: “While the quarterly and annual rates of house price growth have improved, they are lower than at the start of the year. UK house prices continue to be supported by an ongoing shortage of properties for sale and solid growth in full-time employment.
“However, increasing pressure on spending power and continuing affordability concerns may well dampen buyer demand. There has been recent speculation on the possibility of a rise in the Bank of England Base Rate. We do not anticipate this will have a significant effect on transaction volumes.”
‘Property market still in limbo’
This assessment of market was echoed by Octane Capital CEO, Jonathan Samuels, who noted that despite the overall positive numbers from the Halifax, the property market was still in limbo and would remain there while a number of key political and economic factors play out.
“The price growth we’re seeing is bittersweet, driven by weak supply more than consumer confidence and economic strength,” he said.
“Structural supply problems, a shortage of properties for sale and a robust jobs market are keeping the property market afloat.”
Considering the likely interest rate rise from the Bank of England, Samuels added the consensus was that it was unlikely to rise by more than quarter of a per cent.
“The stakes are simply too high and the economic backdrop too uncertain for anything more than a nominal rise in interest rates,” he continued.
“Since any rate rises will be limited, the impact on transaction volumes may indeed be negligible in the near-term.
“It’s when rates start creeping towards and above 1% that we are likely to see confidence hit. That’s when things start to change and when prices could come under increased pressure.”
He concluded by noting that in 2018 the narrative of a sideways-moving market with relatively low transaction levels and buyers in the driving seat was likely to continue.