House Prices Recover From April Slump but Annual Growth Slows

Recently, the rate of annual house price growth has slowed for not only one month, but two. According to Halifax, the property market is described as being “subdued.”

Halifax’s May House Price Index has revealed that average house prices were up by 1.9% annually, slower than the 2.2% yearly growth recorded in April, to £224,439.

House prices are resuming to climb on a monthly basis, up 1.5% during May after a 3.1% decline in April.

It is possible that house prices are largely being sustained by a strong labour market, according to Russell Galley, Managing Director of Halifax who commented: “These latest price changes reflect a relatively subdued UK housing market.

“After a sharp rise in January, mortgage approvals have softened in the past three months. Both newly agreed sales and new buyer enquiries are showing signs of stabilisation having fallen in recent months.

“The continuing strength of the labour market is supporting house prices. In the three months to March the number of full-time employees increased by 202,000, the biggest rise in three years.

“We are also seeing pay growth edging up and consumer price inflation falling, and as a result, the squeeze on real earnings has started to ease.

“With interest rates still very low we see mortgage affordability at very manageable levels providing a further underpinning to prices.”

Remarking on the figures, Jeremy Leaf, north London Estate Agent and a former RICS Residential Chairman, said: “At first glance, these figures look disappointing with Halifax reporting annual house price growth softening in May.

“Once again, we are seeing the rather topsy turvy pattern to the housing market – up one month, down the next. It is the same on the ground – no real pattern, with buyers and sellers negotiating hard but not always successfully.

“Looking forward, we expect more of the same and possibly slightly better as we await figures reflecting the crucial spring market period.”