UK house prices up almost 4% in May, latest index figures show
House prices in the UK increased by 3.9% in May, the third monthly increase since the beginning of the year, according to the latest index from leading property lender the Halifax.
It is a sign that the growth in the market does not seem to be softening as some commentators have suggested and an examination of the quarterly figures seems to bear this out. Monthly movements, however, can be volatile and the quarter on quarter change is a more reliable indicator of the underlying trend.
House prices in the latest three months from March 2014 to May 2014 were 2% higher than in the preceding three months of December 2013 to February 2014. House price change on this measure has now remained steady in a narrow range of 1.9% to 2.3% since June 2013.
Prices in the three months to May were 8.7% higher than in the same three months a year earlier. This was marginally higher than in April when it was 8.5%.
The index report points out that home sales edged down by 1% in April to 103,690, however, transactions are still a third higher than in April 2013. Annually, transactions grew to 1.142 million in the year to March 2014 a rise of 23% from the same period a year earlier according to seasonally adjusted figures from HMRC.
The Halifax says that the growing difference between housing demand and supply continues to be a key driver of house price increases. Growth in new buyer enquiries have remained steady so far this year while the number of home owners providing instructions to put their property on the market for sale declined for the fourth consecutive month.
However, latest house building figures show signs of improvement which could help to bring demand and supply into better balance. The number of private housing starts in England in the year to March 2014 increased by 34% to 108,400 from a year earlier, according to the Department of Communities and Local Government.
‘On an annual basis housing demand is still strong and continues to be supported by a strengthening economic recovery. Consumer confidence is being boosted by a rapidly improving labour market and low interest rates, although growth in average earnings still remains weak,’ said Stephen Noakes, Halifax mortgages director.
‘However, there are signs of a revival in house building which should bring supply and demand into better balance and curb upwards pressure on prices over the medium and longer term,’ he added.