House price inflation rate down, is the market stagnated? |
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Tue, 10 May 2005 11:44
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The property market remained dull throughout April with little or no movement in house prices, according to a recent report from the Halifax, a business which is not only one of the largest mortgage lenders in the UK but is also a nationwide estate agent.
The Halifax claims that the house price inflation annual rate dropped to 7.8 percent in April, which was the lowest rate in four years. Indeed, since January of this year, there has been such negligible movement property and house prices that they could also be described as 'stagnated'.
| Chief economist at the Halifax, Martin Ellis was quoyed as saying, "House prices were unchanged in April, and overall there has been no movement in prices at the national level since January. The annual rate of house price inflation is now at its lowest since June 2001. It has fallen from 22.1 percent last July and is expected to continue to fall over the coming months."
Nevertheless, he anticipated that the a ‘broad stability’ was close at hand as Halifax estate agents noticed an increase in the sale of houses, along with a rise in the number of home mortgage approvals, which hit a seven month high in the month of March. He added that first time buyers could benefit in the present time as the slight fall in prices had made houses more affordable.
Ellis explained, "Average house prices have fallen back slightly as a multiple of average earnings in recent months, reflecting the slowdown in house prices. As a result, the house price to earnings ratio has dropped from a peak of 5.63 in September 2004 to 5.48 in February. We expect the ratio to fall further over the coming months as earnings rise at a more rapid pace than house prices. This development will make it slightly easier for first-time buyers to enter the market."
The Halifax research also revealed that the total wealth owned by private households had significantly increased during recent years. It's report showed that private households owned about 12 percent more wealth now than in 2004 mainly due to rising house prices.
Last week the Nationwide building society had predicted that house price inflation would be no greater than 2 percent throughout 2005; if true, this would be the lowest annual rise in a decade.
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