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UK house prices pick up amid low supply

UK house prices pick up amid low supply

LONDON: UK house prices firmed last month amid constrained supply, according to the latest figures from Halifax. House price inflation as measured by Halifax´s House Price Index rose by 1.1% in August versus the 0.7% increase registered in July. The stronger monthly performance means the annual rate of house price growth increased to 2.6% in August versus 2.1% in the prior month. It takes the average UK house price to a record £222,293, just above the previous peak of £222,190 reached in December 2016. While UK interest rates remain at record lows, estate agents are also grappling with a lack of stock. Recent data from the Royal Institution of Chartered Surveyors’ (RICS) showed new instructions for home sales fell for the 17th consecutive month in July. “House prices should continue to be supported by low mortgage rates and a continuing shortage of properties for sale over the coming months,” said Halifax managing director Russell Galley. Halifax also pointed to strength in the UK labour market as a factor underpinning the housing market. Official data released in August showed unemployment fell to 4.4% in August from 4.5% in the prior month, the lowest rate of joblessness in 42 years. However, the lender also warned that the failure of wages to keep up with inflation could hamper house price growth going forward.

A recent survey found most UK employers were planning to raise wages by only 1% over the next year compared with the current UK inflation rate of 2.6%. Low supply, coupled with rising sales and mortgage approvals, suggests UK house prices could make further headway in 2017. HMRC figures show UK home sales edged up to 104,760 in July, the highest monthly level since March 2016. In the three months to July, activity was 10% higher than in the same period last year. Mortgage approvals for house purchases also jumped by 5.2% in July, reaching 68,700.