House prices all but spluttered to a halt in August in further signs that the recent property market frenzy is abating, lender Halifax said today.
Average property prices barely rose at all last month — up just 0.1% to £186,270 compared with a 1.2% surge in July. That takes annual price rises back below double-digit territory, 9.7% higher than last year in the quarter to August.
Halifax’s snapshot is weaker than rival Nationwide’s — which registered 0.8% growth for the same month — but chimes with surveys from the Rics, Rightmove and Hometrack suggesting a cooling market.
These signs that a potentially dangerous house price surge is receding will reassure the Bank of England’s rate-setters — deputy governor Sir Jon Cunliffe has said the housing market was the “blinking warning light” on the Bank’s dashboard.
Halifax’s housing economist Martin Ellis said: “There are some signs of an improvement in housing supply, both in terms of more second-hand properties coming onto the market and increased numbers of new homes.
"These trends, if sustained, should help to improve the balance between supply and demand, contributing to an easing in the pace of house price growth.”
The Bank’s Financial Policy Committee said in June that lenders should restrict mortgages exceeding 4.5 times the borrower’s salary to 15% of their lending as well as testing whether borrowers could afford their mortgage in the face of a three percentage point rise.
Mortgage approvals eased back to 66,569 in July after picking up to 67,085 in June, and buyers are also wary of a first rate rise in seven years from the Bank as the economy recovers.
Against that, builders are still struggling to keep up with the demand for new homes as skills shortages bite.
IHS Global Insight’s Howard Archer said: “The Halifax data tie in with our view that house prices will keep on rising overall through the coming months, but at a more restrained rate.”
