Halifax, in agreement with Nationwide’s last report, found house prices rose by 1.0% in August, indicating a more than healthy market, although the lender did say it anticipates a slowdown towards the end of the year.
The overall increase in prices is just 0.2% between May and August, a figure which compares with a 2.9% rise in the preceding months, which indicates a slow in inflation. Halifax found that the annual rate of house price inflation fell from 9.4% in June to 8.2% in August.
The outlook overall, remains fair, according to the Halifax, as the Bank of England today decided to leave interest rates unchanged at 4.75%. ‘The market is underpinned by sound fundamentals,’ said Chief Economist Martin Ellis.
‘Housing market activity remains firm with the number of loans approved for house purchase in the three months to July 2006 up 24% compared with the same period a year earlier. There is however, evidence that activity has reached a plateau with the latest RICS survey reporting little change in completed property sales in July for the third consecutive month.
‘We expect this trend to continue over the coming months with the annual rate easing to 5% by the end of the year.’
Kelvin Davidson property economist at Capital Economics, added: ‘Today’s data will no doubt lead to some argument that the rate increase [last month] has been shrugged off by the housing market. However, many buyers will have made the decision to purchase before the rate rise was delivered, suggesting that it will be another two or three months before its impact can be properly assessed.
‘We continue to believe that stretched affordability, in tandem with the risk of higher interest rates, will cause house price growth to slow in the coming months.’