House price growth slows as affordability issues constrain demand

For-sale-sign-estate-agent-700.jpg

House prices in the UK experienced an annual increase of 5.8 per cent in the three months to September but fell marginally on the previous quarter.

The annual increase represents a slowdown in growth from August, when prices increased by 6.9 per cent year-on-year.

Halifax housing economist Martin Ellis says: “The housing market has followed a steady downward trend over the past six months with clear evidence of both a softening in activity levels and an easing in house price inflation.

“The reduction in annual house price growth from a peak of 10 per cent in March to 5.8 per cent six months later remains in line with our forecast at the end of 2015. A lengthy period where house prices have risen more rapidly than earnings has put pressure on affordability, therefore constraining demand.

“Very low mortgage rates and a shortage of properties available for sale should, however, help support price levels over the coming months.”

Your Move & Reeds Rains executive director Adrian Gill says that the increase now is a good time to buy a home, but that supply is still a big issue.

“The stunted supply of new properties has meant that fewer existing homeowners are able to move up the housing ladder, ultimately impacting first time buyers.  For many of these would-be homeowners, the private rental sector has become their only refuge,” says Gill.

“The new government has already alluded to the fact that housebuilding will be front and centre of it’s agenda, which is absolutely necessary. What we cannot forget about, however, is the important role the private rental sector also plays in our nation’s housing supply.”