Housing market 'can not continue like this': L&G

Housing market 'can not continue like this': L&G

House prices have remained almost flat in the three months to October, according to Halifax’s house price index, amid pressures Legal & General says can not be allowed to continue.

Between August and October, prices were up 0.1 per cent compared with the previous three-month period.

Meanwhile annual growth has slowed to 5.2 per cent, according to the bank’s index.

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The average house price, according to Halifax’s index, was £217,411 in October.

Martin Ellis, Halifax housing economist, said: “Activity levels, like house price growth, have softened compared with a year ago.

“Home sales, however, appear to have stabilised in recent months following the distortions earlier in the year due to the changes to stamp duty in April.

“Annual house price growth has nearly halved from a peak of 10 per cent in March this year, but remains robust at 5.2 per cent.

“This expected slowdown appears to have been largely due to mounting affordability pressures, which have increasingly constrained housing demand.

“Whilst house price growth may ease further in the coming months, very low mortgage rates and a shortage of properties available for sale should help support price levels.”

Sales have largely plateaued in the past few months following the increase in stamp duty on second home and buy to let purchases, which pushed activity through the roof before the changes came in.

UK home sales in 2016’s third quarter (July to September) were 8 per cent lower than in the same period last year.

Supply remains low, with the Royal Institution of Chartered Surveyors reporting that the average level of stock on estate agents’ books is close to historic lows.

Jeremy Duncombe, director of Legal & General Mortgage Club, said: “The average UK home is now six times the cost of the average UK wage, and this price gap shows no signs of shrinking.

"A supply-side crisis defines the UK’s housing market with the amount of affordable first homes being few and far between. For many first time buyers, the dream of finally taking that first step onto the property ladder is moving further and further out of reach.

“The market can not continue like this. We need to see an innovative house building initiative to provide some respite  to this worsening crisis.

"With the Autumn Statement on the horizon, the Government needs to deliver on its promise to build thousands of affordable homes for our country. Until we see some real action in place and on the ground, our housing market will remain stagnant and exclusive.”