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Housing Market Remains Relatively Subdued

The average house price in the UK stood at £224,439 over the three months May, according to the latest House Price Index from Halifax. This is 1.9% higher than in the same period last year. On a monthly basis, prices rose by 1.5% in May, which has partially reversed the 3.1% monthly decline experienced in April. 

Key Property Market Figures

Other key facts revealed by the Index include:

  • UK home sales grew by a healthy 4% from 96,800 in March to 100,190 in April. In the three months to April sales were 1.6% lower than in the preceding three months.
  • Bank of England industry-wide figures show that the number of mortgages approved to finance house purchases – a leading indicator of completed house sales – were 62,455 in April. This was a 0.6% month on month decline – marking the third consecutive month in which approvals have fallen. In the three months to April approvals were 1.9% lower than in the preceding three months, continuing to indicate a subdued residential market.
  • After four straight months of sharp decline, new buyer enquiries stabilised in April. However, demand fell for the 13th month in a row. Supply continues to remain tight with new instructions falling for the 26th consecutive month in April; however the pace has slowed markedly. Agreed sales also held relatively steady over the month.
  • The average price of a flat in the UK has risen by £75,074 over the last five years, from £157,061 in 2013 to £232,135 in 2018. Flats now account for 15% of all home sales. Although six in every ten property sales last year were either terraced or semi-detached properties, flats have increased in value by 48%, compared to 39% for all property types over the same period. Although flats have recorded greater price gains over the past five years, semi-detached and terraced homes have remained the most popular choices for homebuyers.

House Prices Supported by Strengthening Labour Market

“These latest price changes reflect a relatively subdued UK housing market. After a sharp rise in January, mortgage approvals have softened in the past three months, whilst both newly agreed sales and new buyer enquiries are showing signs of stabilisation having fallen in recent months,” commented Russell Galley, Managing Director, Halifax.

“The continuing strength of the labour market is supporting house prices,” he said. “In the three months to March the number of full-time employees increased by 202,000, the biggest rise in three years. We are also seeing pay growth edging up and consumer price inflation falling, and as a result the squeeze on real earnings has started to ease. With interest rates still very low we see mortgage affordability at very manageable levels providing a further underpinning to prices.”

Rise in Gross Mortgage Lending

Recent figures from UK Finance paint a more positive picture of the mortgage market, and reveal an increase in gross mortgage lending in April, which at £20.4 billion is 13.3% higher than in April last year.

The number of total mortgage approvals has also risen and is 11% higher. According to UK Finance, this increase is primarily driven by remortagage approvals which were almost 30% higher than a year earlier.

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