June 7, 2005

Halifax reports flat housing market

by brian_turner

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According to the Halifax bank, house prices fell 0.6% in May, although prices have fallen just 0.1% since the start of the year. Over the past three months, the market has been flat, with prices falling by 0.3%.

House prices are growing at their slowest rate for four years, on an annual basis, with a 5.7% rise in May.

Although the Halifax expects a 2% fall in prices this year, it believes that the housing market will continue to be supported by strong economic growth in the UK. The fact that interest rates remain at low levels will be beneficial, as will record employment levels, good affordability and increasing earnings.

Annual growth is expected to continue to decline throughout 2005, with sales 30% lower that at this time last year. However, sales activity has stabilised in recent months and the number of home loan approvals increased for the third successive month in April.

First-time buyers will benefit from the gradual fall in prices. On average, new buyers now pay 20% of their income on mortgage repayments, slightly higher than the 19% average of the past 20 years.

The recent slow-down in both the housing market and retail sales means that it is unlikely that the interest rate will be increased further.

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