Housing getting back on track with 1.6% price rise

Latest research from Halifax reveals the housing market to be showing signs of getting back on track with a 1.6% price rise in August.

The gain, revealed in Halifax’s All Houses, All Buyers Index, follows a 0.4% rise in July. This was the biggest monthly gain since September 2004.

However, prices have increased by only 2.1% in the first eight months of this year compared with a 12.5% rise during the same period in 2004.

On an annual basis, house prices were 2.5% higher in August, marking a significant downward trend in underlying house price inflation over the past year from an annual rate of 21.3% in August 2004.

Bank of England figures show that market activity is improving, with the number of mortgage approvals to fund house purchases increasing in July, The number of loans stands 26% higher than in November 2004 on a seasonally adjusted basis.

And the Royal Institution of Chartered Surveyors says completed sales also rose in July, following four months of stagnation. The RICS notes there was an increase in new buyer enquiries for the second consecutive month.

But Halifax’s prediction for the rest of the year is that house price growth will remain broadly stable.

Martin Ellis, chief economist at Halifax, says: “A slowdown in economic growth and the high level of house prices in relation to earnings should prevent a surge in house prices.”