House prices grew by just 0.1 percent in May: Halifax |
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Sat, 10 Jun 2006 09:35
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LONDON - House prices in the UK increased by just 0.1 percent in May signaling a slowdown in house price growth for the first time since January this year, the Halifax bank said. May's figure was drastically below the 2.0 percent increase recorded in April. The annual house price growth is now at 9.1 percent.
"The pressures on the household sector resulting from higher unemployment and significantly higher household bills, together with the current high level of house prices in relation to earnings, are likely to constrain housing demand and curb house price growth and activity over the remainder of 2006," said Martin Ellis, chief economist at Halifax. He added that the market activity could be leveling off.
Halifax said that the activity in the second half of 2006 would also level off. Halifax's figures appear to tally with that of Nationwide, which had said that house prices in May grew by just 0.2 percent. The average house price is now £178,997.
Reacting to this new set of figures, Howard Archer, chief UK economist at consultancy Global Insight said, "While it is premature to draw any firm conclusions, there are growing signs that the recent 'mini boom' in the housing market is faltering. Consequently, we are becoming modestly more confident in our long-held belief that house prices will ease back into an extended period of relatively modest rises over the coming months."
Adding credence to his statement was the fact that mortgage approvals dropped 7 per cent in April to 106,000, according to the Bank of England figures.
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