PropertyOct 6 2017

House price growth at 7-month high

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House price growth at 7-month high

House prices grew at their fastest rate in seven months in September as the market remained in the grip of a supply shortage.

In the three months to September, prices were 1.4 per cent higher than in the previous quarter and 4 per cent higher than the same period in 2016 - the fastest rates of growth since February.

Meanwhile, the monthly rate of growth slowed to 0.8 per cent - down from 1.5 per cent in August, but still the second highest rate of increase this year.

The average house price is now £225,109 - the highest on record.

Russell Galley, managing director, Halifax Community Bank, said: “While the quarterly and annual rates of house price growth have improved, they are lower than at the start of the year. UK house prices continue to be supported by an ongoing shortage of properties for sale and solid growth in full-time employment. 

“However, increasing pressure on spending power and continuing affordability concerns may well dampen buyer demand. There has been recent speculation on the possibility of a rise in the Bank of England base rate. We do not anticipate this will have a significant effect on transaction volumes.”

Data from HMRC showed housing transactions remained flat in August as mortgage approvals – a leading indicator of house sales – declined by 3.3 per cent, according to the Bank of England.

The Royal Institution of Chartered Surveyors revealed the balance of new sales instructions for home sales fell for the 18th consecutive month in August, while average stock levels on estate agents’ books remained close to an all-time low.

Other indicators point to a regional divide in house price trends, with the rate of growth slowing in London and the south east but remaining strong in regional cities.

Hometrack’s latest city house price index showed annual growth was around 7 per cent in Manchester and Birmingham during August, compared to just 1.9 per cent in London.

Jonathan Hopper, managing director of Garrington Property Finders, commented: “In London, prices have been sliding in many of the areas that saw the frothiest rates of growth during the boom.

“On the flipside, the flight of equity from the capital is fuelling activity in several regional markets where affordability and perceived value for money is now enticing higher volumes of buyers.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Once again, the market has proved its resilience and confounded the doom mongers. Not that there is too much to get excited about with these figures which confirm what we have seen at the coalface recently - that prices are holding up reasonably well where vendors are realistic, partly in response to a continuing shortage of stock.

“Sadly, we are not seeing the hoped-for autumn bounce but a steady market is more than welcome with so much uncertain economic news.”

simon.allin@ft.com