Monday, 18 February 2019

House price inflation shows little change

THE UK housing market continued to record relatively subdued price inflation during the third quarter of this year, according to the latest figures provided by the Halifax House Price Index.

The index, which is administered by IHS Markit, signalled that prices rose by 2.7 per cent on a year-on-year basis, up from 2.2 per cent in the previous quarter and matching the level seen over the first three months of the year.

On a quarter-on-quarter basis, house prices were up by 1.6 per cent. That helped to offset marginal falls seen earlier in the year and represented the best quarterly increase in prices since the final three months of 2016.

In cash terms, the standardised UK house price improved to a new record level of £230,309. Compared with the same period a year earlier, prices were up by £6,108.

Ten out of the 12 regions registered annual price inflation, with Northern Ireland, Scotland and the West Midlands leading the way.

In the South of England, price inflation remained relatively subdued as, despite improving since the previous quarter, rates remained well down on the averages seen since 2010.

But house prices are still highest in southern England. Looking at the nominal cash change over the past year, the West Midlands recorded the largest increase in prices (£15,134) of all UK regions.

This contrasted markedly with declines of £8,043 and £4,321 in the North of England and Yorkshire & Humber respectively.

However, standardised house prices remain comfortably highest in London (£460,791), a level around double the UK-wide level (£230,309). Although price trends in the capital have been more subdued during recent quarters, in cash terms prices are some 73 per cent higher than 10 years ago when the collapse of Lehman Brothers marked the intensification of the global financial crisis.

Meanwhile, the South East (£352,114) remained in a comfortable second placeduring the third quarter of 2018, whilst the South West (£248,680) moved marginally ahead of East Anglia (£245,029).

In contrast, Northern Ireland(£142,420), the North of England (£142,946) and Scotland (£143,974) continued to record house price levels well below the national average.

Moreover, prices in Northern Ireland are still well down on levels seen a decade ago, minus 16 per cent, whilst there has been only marginal growth seen in the North of England (four per cent) and Scotland (seven per cent).

Paul Smith, economics Director at IHS Markit said: “The UK housing market continued to tread water during the third quarter of 2018.

“Although prices were up at a slightly faster rate, underlying inflation remains stuck in a narrow range of two to three per cent and subsequently amongst the weakest seen over the past five years and this trend is likely to persist in the near-term.

“Whilst limited supply, high levels of employment, various government incentives and still low borrowing rates provide ongoing price support, these will continue to be broadly offset by stagnant real wages, the potential for higher borrowing costs and, perhaps most crucially, ongoing Brexit uncertainty.”

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