View more on these topics

Halifax reveals 0.6% fall in house prices in August

This was the tenth monthly fall in the last five years, a period when prices in the UK have more than doubled.

House prices have increased by 1.8% during the past three months. This is significantly below the 6.5% rise recorded in the preceding three months. It is becoming increasingly clear that the five rises in interest rates since November 2003 are acting as a brake on house price growth.

A number of other key market indicators have shown a softening in housing market activity over the past few months. These indicators, however, show that activity levels remain at historically high levels and are consistent with a moderating housing market.

Other reports have backed up the findings. For example, the monthly RICS survey has shown both a rise in the stock of unsold properties on estate agents&#39 books and a fall in buyer enquiries in recent months. Both developments are indicative of a fall in housing market activity. Nonetheless, the stock of unsold properties remains at a low level on a historical basis and is still 14% lower than a year ago. Additionally, the fall in buyer activity has been less pronounced than during the Iraq war in 2003.

The number of mortgages approved for house purchases fell in July for the second successive month and was 27% below its peak in December 2003 on a seasonally adjusted basis, according to the latest Bank of England figures. The number of approvals in the three months to July, however, remained 3% above the average quarterly level recorded over the past five years.

These indicators show that activity levels remain at historically high levels despite recent signs of weakening. These results are consistent with a moderating housing market.

UK economic growth, at 3.7%, remained comfortably above its long-term average rate in the second quarter of 2004, data from the ONS says. This strong economic performance has resulted in high levels of employment – the total number in employment has risen by 443,000

over the past two years to 28.29m. The claimant count unemployment rate has fallen to its lowest level in more than twenty-five years at 835,200 – 2.7% of the workforce – following a 102,400-drop in the past year. A buoyant labour market has contributed to the ongoing strength of the housing market.

Halifax says it expects higher interest rates to temper activity and predict that GDP growth will ease from approximately 3.5% in 2004 to around 2.5% next year &#45 more in line with long-term historical average growth rates. Despite this slowdown, economic growth is likely to remain at levels that will maintain a strong labour market, therefore underpinning housing demand. Sound demand, combined with ongoing housing supply shortages, will support house prices.

Recent interest rate rises and constraints on first-time buyer affordability will, however, curb house price inflation and activity. The difficulties faced by potential first-time buyers in entering the market are underlined by the latest Council of Mortgage Lenders figures, showing that first-time buyers took out only 28% of home loans in the three months to July, significantly below the 44% average over the past ten years. The lender expects house price growth to moderate over the remainder of 2004 and into 2005.


Mortgage Express acquires GMAC-RFC portfolio

The purchase is the third arising from an agreement announced in December 2003 to acquire from GMAC-RFC a minimum of £400m, and up to £1.4bn, of loans in 2004 in four tranches. The total amount acquired by Mortgage Express so far in 2004 is £717m. All lending in the portfolio is secured on UK residential […]

Mortgage Trust and Savills Private Finance join forces

The deal boasts the low initial rate of 5.69% fixed until 31/10/05, followed by a year two rate of 5.99% fixed until 31/10/06. Not only is this stepped fixed rate very competitive, but the rental income calculation is based on the initial fixed rate of 5.69%. Mortgage Trust also offer up to 85% LTV, no […]

SPML announces board appointments

Melanie Leask has been promoted from executive manager mortgage servicing to director of mortgage servicing, and Anthony Keeble has been promoted from chief accountant to finance director. Angela Davies, formerly SPML&#39s director of operations has moved to a position within SPML&#39s parent company, Lehman Brothers, where she will continue to contribute to SPML&#39s strategic direction […]

Intermediaries top landlord poll

A further 36% of this number look for the best deals on a six-monthly basis.The mortgage market is always changing and by reviewing their arrangements regularly, canny investors are able to take advantage of favourable deals. Mortgage advisers are the most popular source of information about current mortgage products, with 60% of landlords turning to […]

How to use wills to protect your clients’ wishes

By Ross Jackson, senior protection marketing manager March is Free Wills Month! Free Wills Month brings together a group of well-respected charities to offer members of the public aged 55 and over the opportunity to have their simple wills written or updated free of charge by using participating solicitors in selected locations around England and Wales. Research […]


News and expert analysis straight to your inbox

Sign up