House prices grew by 3.3% on an annual basis in May, the lowest annual rate of growth recorded since May 2013, according to a new house price index.
The latest Halifax house price index reveals that property prices were 0.2% lower in the last three months (March to May) than in the quarter before (December to February). This is the second quarterly fall since November 2012, when prices fell by -0.3%.
Meanwhile, the number of properties on estate agents’ books is said to be at a historic low, with the number of properties coming on to the market falling for the 14th month in a row this April.
Between March and April, house sales fell by 3% and mortgage approvals fell by 2%. Market activity has reportedly been impacted by rising inflation and weak wage growth, as well as the changes to stamp duty for second homes and buy to let properties.
Martin Ellis, housing economist at Halifax said:
“The fact that the supply of new homes and existing properties available for sale remains low, combined with historically low mortgage rates and a high employment rate, is likely to support house price levels over the coming months.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said:
"The Halifax figures are interesting as they reinforce findings from other recent surveys, suggesting that we should be concentrating not just on increasing supply of new homes but encouraging existing homeowners to move. Buyers and sellers have been in limbo recently with the market awaiting more certainty from the General Election and Brexit negotiations.
"However, the good news is that there is no sign of market collapse while mortgage rates remain low."
Jeremy Duncombe, director, Legal & General Mortgage Club, added:
“We need to be clear that these figures are not showing prices are falling, they are just rising less quickly. Over a 12-month period, average prices are still rising at [3.5%] compared to wages rising by [2.1%]. This represents little comfort to struggling first time buyers trying to get on the property ladder. House prices remain staggeringly high across much of the country and the changes we are seeing in London and the South East are more a slow-down in astronomical price growth, than an actual dip.
“The only way to help struggling potential buyers to purchase their first home is to build more houses in key areas. We need a realistic, deliverable plan, that will give this country the injection of new homes it needs to expand the market and make homeownership more accessible to all those who desire it.”
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