House prices increased again in May, according to the Halifax?s latest figures. Although the rise was just 0.1% – the smallest monthly increase since January?s 0.2% fall – the market is certainly stronger than this time last year. House price inflation now stands at 9.1% so far this year, with 66,600 properties in Britain valued at £1 million and more compared with only 3,400 in 1995 ? a twenty-fold increase.
This time last year the Halifax reported falling house prices, whereas they are now growing at the highest rate for 14 months. But according to the Halifax, the stronger pattern of house price growth in the second half of 2005 compared with the first half should mean that annual house price growth moderates during the second half of this year.
Property economists had always forecast market growth in May and still suspect that June will produce similar results. But they predict house price growth will slow in the second half of the year, as base effects become less favourable.
The number of mortgage approvals to fund house purchase fell in April for the second time in four months, according to the Bank of England, causing property experts to predict a downturn. ?We continue to expect a more subdued housing market in the second half of the year? said Kelvin Davidson of Capital Economics.
Nevertheless annual growth on the Halifax index is still well above that shown by the other main measures of house prices and while mortgage demand seems to have peaked, the Royal Institute of Chartered Surveyors is reporting new buyer interest.
The prime market is continuing to flourish. One in three of all million pound plus property sales in Britain in 2005 were in just two London boroughs: Kensington & Chelsea (657 sales) and the City of Westminster (503 sales).
Outside London, the South East and East of England, Poole in Dorset has had the highest number of sales over £1 million since 1995 with 184 properties. Midlothian in Scotland (154 sales), Trafford in Greater Manchester (139 sales) and Macclesfield in Cheshire (103 sales) are the other areas outside London, the South East and the East of England with sales of more than 100 properties during this period.