House price growth sinking, 'Slowest for Four Years' |
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Wed, 08 Jun 2005 10:00
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One of the biggest mortgage lenders in Britain, Halifax, stated that growth in house price has plunged to its slowest rate for four years.
From 22.1% in July last year, the present annual house inflation was running at an incredibly low figure of 5.7% in May. This was the lowest percentage witnessed since May 2001 with forecasts of further reduction over the coming months.
Having slipped for the third time in a short span of six months, prices fell by 0.6% during the month.
Prices have plummeted by 0.1% since the start of the year and what is astonishing is that a particular rise in a respective month is soon wiped off by a subsequent fall in the next. Price index reveals that the market is functioning in a “narrow band” with absolute no increase at all.
Halifax indicated that in spite of the incessant fall in the price index, market continues to be “underpinned” by satisfying fundamentals, low interest rates, record employment levels and increase in real earnings.
| Besides, there are optimistic signals that the market could stabilize with the Bank of England reporting a rise in the number of mortgages sanctioned for house purchases. The cost of an average house is presently priced at £162,411 from £163,458 in April.
Nationwide Building society indicated that prices rose by 0.3% in May and the price inflation slowed to a nominal 5.5%, the smallest annual increase since August 1996.
Howard Archer, Chief UK Economist from the Global Insight Consultancy commented that “Significantly, the two surveys provide a consistent picture in terms of annual house price inflation with Halifax showing this down to a four-year low of 5.7% in the three months to May, and Nationwide showing it at 5.5% in May (a near nine-year low)”.
Halifax along with the inputs from the Royal Institution of Chartered Surveyors showcase that though sales were 30 % lower than last year, there is a rise in the number of people putting their property on the market which lucidly disclose that there is an inevitable shift from the sellers market (2004) to a buyer’s market.
“We continue to believe that the housing market will avoid a sharp correction, although we acknowledge that there is a risk of this should the economy slow markedly, and unemployment starts to rise significantly over the coming months”, said Mr. Archer.
He further added, “ Instead, we forecast that there will be an extended period of relatively subdued housing market activity and soft prices." “ An interest rate cut still seems unlikely until at least the autumn".
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