Halifax Records Higher Annual House Price Growth than Nationwide

In its latest House Price Index, Halifax recorded higher annual house price growth for the month of December than Nationwide did in its most recent report.

According to Halifax, house prices increased by an average of 1.3% on an annual basis in December, which was up from 0.3% in the previous month. Nationwide, on the other hand, found that annual house price growth was down to an average of 0.5% in December.

On a quarterly basis, house prices in the three months from October to December were 0.4% lower than in the preceding three months (July to September), reports Halifax.

Month-on-month, house prices rose by an average of 2.2% in December, following a 1.2% decline in November.

The average UK property value was £229,729 in the last month of 2018.

Housing market activity

Halifax also looked at housing market activity in its report, for the month of November (for which the latest figures are available).

The number of home sales in November of 100,930 was just 100 higher than the same figure for October. On an annual basis, sales in November were 1.8% higher than the same month of 2017. There has also been a 2.1% increase quarter-on-quarter.

However, on a longer view basis, less change is evident, as the November sales figure is marginally below the five-year average of 101,587.

Bank of England data shows that the number of mortgages approved to finance a home purchase – a leading indicator of completed sales – fell by 4.5% to 63,728. October had seen a relatively high approval rate for 2018, and, while there was a drop in November, approvals were still not far below last year’s average of 64,955.

The November 2018 UK Residential Market Survey by the Royal Institution of Chartered Surveyors (RICS) showed a drop on nearly every measure assessed. The new buyer enquiries gauge fell to -21%, from -15% previously, indicating that homebuyers are more cautious. Furthermore, the newly agreed sales net balance moved to -15%, from -10%, suggesting a decline in national sales transactions.

Comments

Russell Galley, the Managing Director of Halifax, comments on the report’s findings: “In December, the average cost of a home was £229,729 and annual house price growth stood at 1.3%. A stronger monthly growth figure for December reversed a weak November figure; monthly fluctuations are common, leaving the annual figure very firmly in the range of 0-3%, as we forecast at the start of the year.

“In 2019, we’re expecting continued stability in house prices, with between 2% and 4% price inflation. This is slightly stronger than 2018, but still fairly subdued by modern comparison. However, this expectation will clearly be dependent on the Brexit outcome, with risks to both sides of our forecast.

“Of course, there are a number of other factors that will impact the market in 2019. The need to raise a significant deposit still acts as a restraint for those looking to buy a new home, limiting the number of potential purchasers.

“This year, mortgage payment affordability is more difficult to predict. There are competing pressures, with signs of positive annual pay growth supporting affordability, but risks associated with the potential for higher interest rates are pulling in the other direction. On balance, we do not see affordability pushing house price growth significantly in either direction.

“The shortage of homes for sale and continuing low levels of housebuilding both constrain the supply of houses, and, in turn, support high prices, which will continue to inhibit demand in 2019.”

Kevin Roberts, the Director of Legal & General Mortgage Club, also responds to the figures: “Despite annual house price growth still being on the rise, we’re seeing much more sustainable levels of growth. Couple this with lenders lowering interest rates for small deposit buyers, and first time buyers are getting much-needed support to get onto the housing ladder.

“It’s not just lenders that are stepping up to help buyers, though. Government schemes, such as Help to Buy and Shared Ownership, continue to play a positive role in our housing market, too. With a wide range of innovative solutions and support on hand for buyers, we hope to see more and more individuals take their step into homeownership over the year ahead.”

Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, adds: “The country has marched gamely up to Christmas, and, with three months to go before Brexit, is refusing to blink. Last month, there were fears the Brexit switch had been flipped, as house price growth plumbed six-year lows.

“It looked for a moment like the UK could have dived for cover into wait-and-see territory in November, after a year in which Brexit appeared to cast a remarkably short shadow at times. However, these figures breathe new life into claims Britons think this storm can be weathered.

“The imminent prospect of the UK’s most traumatic geopolitical lurch back in time is simply failing to tame buyer confidence, which is proving to be remarkably resilient. Even in the face of a no-deal Brexit, Britons are betting on the UK making a success of it, rather than sitting on their hands and dodging untimely financial risks.”

Guy Harrington, the CEO of lender Glenhawk, concludes: “These latest figures continue to show that the UK housing market is resilient to external factors, as a combination of a chronic lack of supply, due to a clunky and outdated planning system, and the need for more starter homes continues to keep the market buoyant. Overall, a positive sign amongst the train wreck that is Brexit.”