House prices rise by 1.2 per cent in June, says Halifax
The average price of a house in the UK increased by 1.2 per cent in June compared with May, but was 3.5 per cent cheaper than this time last year, according to the Halifax who released their latest house price index today.
The average price of a house in the UK is £163,049, up from the average in April of £160,393 but well below the level seen in April 2010 when average prices were £168,593.
The annual change is calculated by taking the average price during the three months to the end of June and comparing it with the same period of the year before. The reading in this instance showed the smallest quarterly drop in house prices since the second quarter of 2010.
Halifax said that low interest rates are helping to maintain relative stability in the housing market but low pay rises, inflation and higher taxes were contributing to low demand for new homes from potential buyers.
Halifax's housing economist Martin Ellis said: "Low interest rates, an increase in the number of people in employment and some tightening in market conditions earlier in the year are likely to have been the main factors behind the recent improvement in price trends.”
However, the proportion of disposable income spent on mortgage payments has fallen dramatically over the last four years as interest rates have remained low and mortgage deals have become more competitive. Figures from Halifax show that just 28 per cent of a borrowers’ average disposable income is used for mortgage payments whereas it was 48 per cent in mid-2007.
Howard Archer, Chief UK & European Economist for IHS Global Insight said: “Despite the surprising spike up in house prices in June reported by the Halifax, we retain the view that modest overall falls in house prices are more likely than not over the second half of 2011 and the first half of 2012.”
However, we have reduced our projected drop in house prices by mid-2012 to 5% from 8%, primarily due to the fact that we now expect interest rates to start rising later and more slowly than we previously projected, added Mr Archer.”
The Halifax house price survey produced similar results to one produced last week by the Nationwide Building Society. Its figures stated that average house prices remained flat compared to May and had fallen by 1.1 per cent from their June 2010 level.
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