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House price growth slows after stamp duty rush: Halifax

House price growth slows after stamp duty rush: Halifax

House prices fell by 0.8 per cent between March and April, according to Halifax’s latest index, meaning this combined with February’s 1.5 per cent fall has effectively offset March’s 2.2 per cent gain.

Over the three months to April, prices were 9.2 per cent higher than in the same three months a year earlier and 1.5 per cent higher than in the preceding three months.

UK House pricesApril 2016 (seasonally adjusted)
Annual change+9.2%
Quarterly change+1.5%
Monthly change-0.8%
Average Price

£212,321

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The lender’s data and Bank of England statistics also showed a “dramatic” increase in home sales, from 116,930 in February to 165,480 in March; the highest monthly total since records began in April 2005.

Sales in the first three months of 2016 were almost a third more than in the same period last year, although much of both the monthly and annual increases are likely to be attributable to a rush to beat the new stamp duty tax rates for buy-to-let and second homes in April.

Meanwhile, the volume of mortgage approvals for house purchases – a leading indicator of completed house sales – fell by 2.5 per cent between February and March, suggesting the number of new buyers seeking to complete ahead of the stamp-duty surcharge had already begun to ease.

Approvals, however, were still 15 per cent more than in March 2015, according to the Bank of England.

Royal Institution of Chartered Surveyors’ figures revealed supply remains historically low, as sales instructions ease.

New instructions by home sellers fell marginally in March following three consecutive monthly increases, while stock levels are nearly 20 per cent less than a year ago, at a near historical low.

Martin Ellis, housing economist of Halifax, said current market conditions remain very tight as the severe imbalance between supply and demand persists.

He said: “This situation, combined with low interest rates and rising employment and real earnings, should continue to push house prices up over the coming months.

“Weakening sentiment regarding house price prospects and a dip in consumer confidence, however, suggest that annual house price growth may ease.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said while house prices continue to climb year-on-year, it comes at a slower pace now that the flurry of activity from investors and second homebuyers to meet the stamp duty hike is out of the way.

He said: “With lenders having plenty of money to lend, they can either cut rates – which are already pretty low – or ease criteria so we expect to see plenty of the latter in coming weeks. For those looking to get a mortgage or remortgage, it is a good time to do it.”

peter.walker@ft.com