Halifax: House prices accelerating again

Friday, 02 December 2005 12:00

House prices rose 1.2 per cent in November, according to Halifax, the third big rise in four months.

The Halifax house price index, which uses in-house mortgage data to calculate the UK's average house price, has now shown annual house price growth accelerating for four months in a row.

After July's nine-year low in house price growth, property values increased 1.9 per cent in August, 1.1 per cent in September, were flat in October, and then rose by 1.2 per cent in November.

If this level of growth continued, house prices would rise 12.6 per cent in a year.

However, four month-on-month falls in house prices in the last 12 months - accompanied by generally slow growth - mean that house prices in November were only 4.5 per cent higher than 12 months previously.

But the recent growth spurt is not being taken as a sign of things to come by most analysts.

"The slowdown in UK economic growth over the past year and the historically high level of house prices relative to average earnings are, however, expected to curb the recent improvement in housing demand and prevent another sustained period of sharply rising property values," explained Martin Ellis, Halifax chief economist.

Howard Archer, chief UK economist at Global Insight, agreed: "The Halifax data will undoubtedly increase speculation that the recent clear pick up in housing market activity and buyer interest is starting to feed through to revive house prices.

"[But] we remain sceptical that house prices are set to see sustained sharp rises any time soon. Most other house price indices have remained relatively muted overall in recent months, including the Nationwide (who reported house prices to be flat month-on-month in November and up just 2.4 per cent year-on-year) and a particularly comprehensive index produced by the Financial Times (up 0.1 per cent month on month and 2.5 per cent year on year in October)."

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