UK house prices fall in February according to latest index from Halifax

on Mar 6, 2015

The latest quarterly report from Halifax has revealed that house prices during February fell by 0.3 percent. This brought the average house price to £192,372 and is the first decline in the average house price since October 2014 according to Halifax. Figures for this particular quarter were keenly anticipated as the stamp duty reform and a traditional drop in sales over Christmas and the New Year made it difficult to produce monthly data of any real forecasting value.

The Halifax report showed that house prices in February 2015 were 8.3 percent higher than for the same month in 2014, but the growth rate had fallen slightly from January’s annual increase of 8.5 percent. Meanwhile, in the three months to February, house prices were 2.6 percent higher than in the preceding quarter. According to the report:
“The supply of both new and second-hand homes available for sale remains low; another factor that is likely to be supporting house prices. Supply remains tight despite housebuilding in England increasing for the second consecutive year in 2014 and a recent rise in the number of properties coming on to the market.”

Notably, figures from the Bank of England indicated that mortgage approval rates increased for the second month in January, to 60,786. This marks the second month-on-month increase of approval rates, after they had previously declined for five consecutive months from July to November 2014. January’s approval rates were also 20 percent higher than the same month in 2014.
Martin Ellis, Halifax’s housing economist, said recent rises in people’s earnings and spending power, coupled with low mortgage rates and recent stamp duty changes were likely to be underpinning the market.

Ellis also said demand for properties remained higher than the number coming on to the market.
“The supply of both new and second hand homes available remains low; another factor which is likely to be supporting house prices.”
Howard Archer, chief UK and European economist at IHS Global Insight, said the small fall in house prices during February looked like a minor adjustment after January’s relatively steep rise.
“We suspect that housing market activity is now gradually turning around after losing appreciable momentum from the early-2014 peak levels, and we see activity picking up modestly as 2015 progresses.”

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