In its latest report on the housing market, the Halifax has predicted that house prices will remain stable throughout the rest of the year, ending the year at roughly the same level as today’s (June) prices. Although its monthly house price indices have been somewhat volatile – down 2.3% between March and April and then up by 0.5% between April and May, house prices are just 0.1% lower than one year ago. The quarterly figure to the end of May showed a rise of 0.8%, with the average house now worth £160, 941.
“While there has been modest improvement in the trend for house prices recently, the current average UK price is very similar to the levels both a year ago, and at the beginning of the year,” said Halifax housing economist Martin Ellis. “We expect this situation to continue with prices likely to still be around today’s levels at the end of 2012, as the ongoing tough economic environment constrains housing demand.”
The Nationwide’s figures are broadly similar to that of Halifax’s; it shows a 0.3% rise in house prices for the month of May, but suggests that homes are worth 0.7% less than they were a year ago – although the year-on-year comparisons are calculated slightly differently by the two big lenders. The Halifax does it on a quarterly basis, whereas Nationwide directly compare the equivalent, individual months. The alarm bell to the industry in all this is the fact that a stable housing market is often deemed to be an inactive one.
House sales could drop to even lower levels if the eurozone crisis continues to deepen. The Council of Mortgage Lenders (CML) confirmed that home loans could become even more scarce and expensive if Euro trauma persists. Although it is believed that UK interest rates are not set to rise for the next three to five years, this will not stop lenders raising their rates due to the cross-border nature of modern banking.
Sources: bbc.co.uk, lloydsbankinggroup.com (image courtesy of alexsarchives.org)