The Halifax Housing Index for November shows house prices increased by 1.2% meaning, overall, prices have increased by 4.7% over the past six months.
On an annual basis, house prices are up 4.5%, significantly below the 16.8% annual growth rate recorded in November 2004. However, the number of mortgage approvals to fund house purchase increased for the fourth successive month in October, according to the Bank of England. The number of loans, at 113,000, on a seasonally adjusted basis, was 35% higher than in October 2004.
Martin Ellis, chief economist at Halifax, says: “The high level of employment and good earnings growth continues to underpin housing demand.
“The slowdown in UK economic growth over the past year and the historically high level of house prices relative to average earnings are, however, expected to curb the recent improvement in housing demand and prevent another sustained period of sharply rising property values.”
Halifax Estate Agents have seen a rise in sales in recent months with sales higher than a year earlier for the first time this year in October.
After a lull in employment growth in the second quarter of 2005, there was a improvement in labour market activity in Q3. The total number in employment rose by 123,000 in Q3 2005 following an increase of only 12,000 growth in Q2. Over the past year, the level of employment increased by 333,000 compared to an increase of 243,000 in the year to September 2004.
Overall economic activity has grown for five consecutive quarters by 0.5% or less, which is below the economy’s long-term historical rate of 0.6% per quarter. On an annual basis, GDP growth was 1.7% in Q3 200×5 compared with the long-term average of 2.5%. Nevertheless, this was still the 53rd consecutive quarter of growth in the UK economy.
The manufacturing sector has been the main source of weakness in the economy with a 0.1% fall in activity over the past year. The service sector, however, continues to grow with an increase in output of 2.3% over the year to Q3 2005. Financial and business services had the strongest rate of growth for the year, at 3.1%. Construction activity was up 2.0% over the year to September 2005.