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News: House price inflation unchanged

Thu, 10 May 07

House price inflation was largely unchanged in April, according to the Halifax bank...

Its latest monthly survey says prices rose by 1.1% in April, dragging the annual rate down very slightly from 11.1% in March to 10.9% last month.

That means the average UK property now costs £196,745.

The lender predicts that recent increases in interest rates, and the likelihood of another one today, mean that house price inflation will ease.

House prices have accelerated sharply in the past 12 months.

But Martin Ellis, chief economist at the Halifax, said the market should soon slow down.

"House prices increased by 1.1% in April; the smallest monthly increase so far this year and the second lowest since July 2006," he said.

"There is accumulating evidence of a slight easing of conditions in the housing market, with further signs of moderation in both demand and activity in the past month," he added.

Other factors the Halifax points to are a recent fall in mortgage approvals and a further drop in inquiries from potential new buyers.

Rate rise?

It is widely expected that the Bank of England will raise interest rates again today, for the fourth time since last summer.

If rates go up by 0.25% to 5.5%, that will mean the cost of borrowing on a standard variable rate mortgage has risen by 22% in just nine months.

That would mean an extra £60 in monthly repayments for someone with a £100,000 repayment mortgage.

Mortgage lenders are known to be worried that the extra financial burden for house buyers will slow down the property market, perhaps sharply.

One additional factor that concerns them is the requirement for all sellers to prepare a Home Information Pack (HIP) from 1 June, which they fear may lead a surge of properties coming onto the market just before the deadline - to avoid the cost - and a shortage afterwards.

 

 

 

 

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