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House price growth bounces back in January

From Property Talk Live on February 5, 2015

House prices in the latest three months (November-January) were 1.9% higher than in the previous three months (August-October) according to Halifax.

The quarterly rate of change increased for the first time since July 2014, but remained below the rates recorded between June and September last year.

Prices in the three months to January were 8.5% higher than in the same three months a year earlier. This was an increase from 7.8% in December.  This measure of annual house price growth was at its highest since October 2014 (8.8%), but remains significantly below the peak of 10.2% in July 2014.

House prices grew by 2.0% between December and January. This is the biggest January monthly increase since 2009 (2.4%).

Home sales increased by 15% in 2014. Sales last year were 15% higher than in 2013, at 1.23 million; the highest annual total since 2007 (1.62 million). Despite this annual rise, sales peaked in the first quarter before steadily declining during the course of the year with sales in the final quarter 5% lower than in the first quarter and 1% lower than in the third quarter. (Source: HMRC, seasonally-adjusted figures)

Mortgage approvals rise. The volume of mortgage approvals for house purchases – a leading indicator of completed house sales – increased by 2% between November and December, to 60,275. This rise in approvals followed five successive monthly falls, possibly suggesting that the recent downward trend may be coming to an end. (Source: Bank of England, seasonally-adjusted figures.)

Supply remains tight. Agreed sales were broadly stable in December following four successive monthly falls, according to the latest data from the Royal Institution of Chartered Surveyors’ (RICS) monthly report. Whilst demand generally has weakened in recent months supply remains very tight with new instructions falling for the fifth consecutive month in December.

Overall, Halifax expect a moderation in house price growth during 2015. House prices nationally are predicted to increase in a range of 3-5% in 2015 compared with 8% in 2014.

Commenting, Martin Ellis, housing economist, said:

“House prices in the three months to January were 1.9% higher than in the preceding three months. This was the first increase in the quarterly rate of increase for six months. Annual price growth also picked up, to 8.5% from 7.8% in December, but remained significantly below last July’s peak of 10.2%.

“This bounce-back in house price growth in January coincides with reports of the first rise in mortgage approvals for six months in December. These improvements may indicate that the recent declines in mortgage rates, the reform of stamp duty and the first increases in real earnings for several years are providing a modest boost to the market. It is, however, too early to draw any firm conclusions. The monthly figures in January can be particularly volatile due to the lower volumes of activity at this time of year and there have been unusually large rises on occasion in the past, such as in 2007 (2.3%) and 2009 (2.4%).

“Housing demand should continue to be supported by an expanding economy, continuing low mortgage rates and a boost to households’ spending power resulting from lower consumer price inflation and reduced fuel bills. Nonetheless, we expect the overall downward trend in house price growth seen since last summer to continue over the coming months. Nationally, house prices are predicted to increase in a range of 3 to 5% in 2015 compared with 8% last year.”

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Source: Property Talk Live