Halifax: House price growth moderates slightly in May

| June 8, 2007 | 0 Comments
Halifax: House price growth moderates slightly in May

The most recent survey from the Halifax, part of HBOS (LSE: HBOS), shows that house price growth is beginning to abate, if only slightly. With an average house price in the UK at £196,893, up £506 from April’s average of £196,387, the price of a house was up by just 0.3 percent in May. The small decline brought the annual house price inflation rate down to 10.6 percent, from 10.9 percent last month. It was the second month in a row that the Halifax survey has shown a slackening in the growth of house prices.

The Halifax’s chief economist said that the new figures, along with signs that fewer people are looking to buy, means that the several interest rate increases since last summer in the UK are finally having an effect on the market. Estate agents are reporting that enquiries from potential buyers are down and the Bank of England has produced data showing that new mortgage approvals are down. While the Halifax believes that house prices growth will slow more during the year, the decline will only be moderate as demand continues and supplies of available houses will remain low.

The Royal Institution of Chartered Surveyors is in general agreement with the Halifax about the direction of house price growth, saying that first time buyers are having an especially difficult time in affording rising mortgage payments. However, RICS says that if interest rates go to 6 percent by the end of the year as some analysts are predicting, the slowdown in house price growth could be steeper than now predicted and that next year could be rough for the housing market.

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