Halifax have reported a fall of 0.3% in house prices in February meaning that the average house price in Britain is currently at £192,372. This is the first drop in house prices since October 2014 and is a month after the 1.9% rise seen in January. It echoes the findings of Nationwide who reported a 0.1% for February.
However, the last quarterly measure, revealing the average prices in the three months leading up to February were 2.6% up on the last quarter. This measure of house prices is considered more trustworthy as it is less myopic. This figure is 8.3% greater than the same quarterly figure for a year ago.
Halifax explained the general rise in house prices as partly to do with supply. Martin Ellis, who is a housing economic specialist at Halifax stated: ìThe supply of both new and second-hand homes remains low; another factor that is likely to be supporting house prices. Supply remains tight despite housebuilding in England increasing for the second consecutive year in 2014 and a recent rise in the number of properties coming on to the market.î
Among the other reasons for the pricing increase is the rise in UK consumers spending power through a hike in real income, the mortgage price war driving loan deal costs down and also the stamp duty alterations that were implemented in December 2014.
The managing director of Prime Purchase, Charlie Wells, spoke specifically to the fact that 90% of the stamp duty market are benefitting from a decrease in the tax.
He also said: ìWith interest rates unlikely to rise this year, those reliant on a mortgage will find it is a good time to buy. This will particularly benefit first-time buyers and stretched young families trying to move up the housing ladder.î
In many ways, mortgage rates are at such a low because of the continuance of the record low 0.5% base interest rate by the Bank of England, running since March 2009. It is likely to continue at this figure at least for the next few months due to low inflation and the anticipated deflation on the horizon.
There is a consensus amongst experts that price rises are starting to cool and will be far less steep than the previous year which witnessed a price hike of £12,000 for the average property in the United Kingdom.
The chief economist at IHS Global, Howard Archer, commented: ìWe suspect that housing market activity is now gradually turning around after losing appreciable momentum from the early-2014 peak levels, and we see activity picking up modestly as 2015 progresses. Consequently, we expect house prices to rise around 5% in 2015.î
However, it should be acknowledged that the market will benefit later this year after the general election and the uncertainty dissipates and buying confidence increases with a more stable economic future.
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