Market Marches On
2nd September 2003
House prices rose by a further 1.3% in August, pushing the average price of a property to £133,908, says the Halifax. The current revival in activity follows a moribund few months (February to May) when the market was hit by the war with Iraq. But since then there have been definite signs of a revival.
The August rise follows a similar increase in July, and suggests that there's still plenty of life in the housing market.
Over the past three months, says the Halifax, prices have increased at an average monthly rate of 1.1%, well ahead of the 0.6% monthly average over the past 20 years.
Halifax's figures are supported by evidence from other sources. According to Inland Revenue data, the number of property transactions in England and Wales bounced back from a seasonally adjusted 103,000 in June to 115,000 in July, stopping the steady downward trend in its tracks.
Estate agents have also noted an improvement in confidence in the market with reports of more buyer enquiries, greater competition for properties and signs that more buy-to-let investors are coming back into the market.
And signs of future activity look good as well. This week's Bank of England data on the number of mortgage loans approved showed a 15% increase from a seasonally adjusted monthly average of 96,000 between February to May to an average of 110,000 in June and July.
The reasons for the continuing strength in the market are easy to identify. Low levels of unemployment and low interest rates have kept the show on the road, though the Halifax does expect the pace to slacken.
Martin Ellis, Halifax's chief economist said: "We expect the rate of house price growth to slow gradually over the remainder of 2003 and into 2004.
"The rapid increase in house prices in regions outside southern England over the past year or so make [will make] it increasingly difficult for first-time buyers, in particular, in these parts of the country to get a foot on the housing ladder.
"Accordingly, we are likely to see a more even pace of house price growth across the regions in 2004 than we have seen in recent years."
© Hallmark Projects 2000-2003