Thu, 06 Jul 06
In a sudden reversal of a somewhat buoyant housing market, house prices dropped 1.2% in June according to the Halifax today.
House prices increased by 4.5% in the first half of 2006 with a 2.6% rise during 2006 Quarter 2.
All houses, all buyers index (1983=100)
Index (seasonally adjusted)
Standardised average price (seasonally adjusted)
The level of activity appears to have moderated in recent months, said the bank. The number of mortgage approvals to fund house purchase during March-May 2006 was down 4% compared with the preceding three months after adjusting for seasonal factors. Property transactions in England and Wales fell for the second consecutive month in May on a seasonally adjusted basis.
But the lender was keen to emphasise that June’s fall meant a more serious fall was about to happen. "Sound fundamentals, underpinned by a strengthening economy, high levels of employment and low interest rates, will continue to support housing demand over the second half of 2006, ensuring that the market remains in good health," said Halifax chief economist, Martin Ellis.
"The annual rate of house price inflation, however, is expected to ease, partly because the corresponding figures last year were strong. Pressure on householders' finances from utility bill and council tax rises, combined with speculation of higher interest rates, are also likely to constrain demand," he added.
House prices increased in all regions during the second quarter with the exception of Wales. The biggest rises were in Scotland (5.7%), South West (3.8%) and East Anglia (3.5%). The smallest increases were in North West (0.2%) and North (0.9%). Wales showed a slight fall (-0.8%), reflecting the increasing affordability difficulties for buyers in the Principality.
The pick-up in house price inflation in London and the South East over the past year contributed to a slight increase in the ratio between prices in the south and north in 2006 Quarter 2. This follows four years of almost continuous decline in the ratio, tentatively suggesting that the north/south divide is at, or slightly passed, its low point in the current cycle.
The average property price in the south stood at 1.58 times the average in the north in 2006 Q2 compared with a peak of 2.19 times in 2002 Q2.
All houses, all buyers (seasonally adjusted)
Yorks & the Humber
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