Annual house price growth has nearly halved over the past 11 months and the continued squeeze on consumer spending power is expected to further curb prices throughout 2017, data from Halifax reveals today.
House prices in the three months to February were 5.1% higher than in the same period a year ago – down from 5.7% in January, latest data from Halifax shows.
And prices in the three months to February were just 1.7% higher than in the preceding quarter
Martin Ellis, Halifax housing economist, said: “A sustained period of house price growth in excess of pay rises has made it increasingly difficult for many to purchase a home. This development, together with signs of reduced momentum in the jobs market and squeezed consumer spending power, is expected to curb house price growth during 2017.”
House prices in the three months to February were 1.7% higher than in the previous quarter; down from 2.3% in
January. The annual rate of growth fell to 5.1% from January’s 5.7%, the lowest since July 2013.
Ellis added: “Housing demand is being supported by an economy that continues to perform well with employment still expanding. Meanwhile, the supply of both new homes and existing properties available for sale remains low. This combination is pushing up prices.”
But Alex Gosling, chief executive of HouseSimple.com, said: “We are comparing growth at the start of this year with the same period last year when the impending stamp duty changes had a profound impact on the market.
“Actually 2017 has seen a steady if unspectacular start, with actvity in the market at levels we would expect to see in a normal year, which 2016 wasn’t.
“Demand hasn’t fallen away despite uncertainty around Article 50, although buyers are taking their time looking before committing to a purchase. And the continued supply shortage is still playing a significant role in price stability.”
Gosling said that the general consensus was that price growth will be low digits in 2017 but added that the critical Spring market often sets the tone for the rest of the year
He said: “Early indicators suggest that we could see a healthy Spring as buyers are starting to make offers rather than simply window shopping, and stock levels are creeping up.
“Also, the Chancellor may want to play a strong hand tomorrow, and if he announces further changes to stamp duty, this could breathe new life into the market.”
Paul Goodman, chairman of the National Association of Commercial Finance Brokers, said that the data once again highlighted a critical absence of housing supply.
“This is underpinned by the fact that houses simply aren’t getting built in the numbers that this country desperately needs – in fact, housebuilding fell by 1% last year,” he said.
“This data starkly lays bare how much the government’s housing White Paper has to do.
“The current status quo, where 10 of the nation’s largest housebuilders provide 60% of homes, clearly isn’t working.
“The communities secretary’s pledge to “diversify” the market – incentivising smaller property developers to build – should help to redress this calamitous stock imbalance, and get the UK building the 250,000 homes it needs every year.”
Jonathan Hopper, managing director of Garrington Property Finders, suggested the latest data reflected the cautious nature of the market.
He said: “Although prices in the three months to February 2017 were up on the previous quarter, this comes at a somewhat steadier rate than we’ve seen recently.
“The ongoing chronic lack of supply is a significant factor currently underpinning prices. Despite renewed focus on housebuilding by the Government, there doesn’t appear to be a quick fix solution that will change the demand/supply imbalance any time soon, although tomorrow’s budget announcements may help make a step towards this.”
But Russell Quirk, founder and CEO of eMoov.co.uk, remained upbeat.
“It would seem the cobwebs have been dusted off after the New Year hangover with these latest numbers showing the UK housing market remains resilient and is bouncing back after a seasonally slow start to 2017, reversing the downward trend seen last month.,” he said.
“With prices having increased both annually and monthly, albeit only marginally, it is probable that we will continue to see the property market blossom as we enter into spring, in what is traditionally the busiest time of the year.”