Consecutive monthly falls of completed house sales ends

Michael Lloyd

July 6, 2018

The number of mortgages approved to finance house purchases – a leading indicator of completed house sales – stood at 64,526 in May, up 2.5% month-on-month, ending the run of three consecutive monthly falls.

The Halifax House Price Index found it was 2.1% lower than May 2017. Approvals have been in a narrow range between 63,000 and 67,000 per month over the past five months; indicating that homes sales are unlikely to change significantly over the next few months.

Russell Quirk, founder and chief executive of Emoov.co.uk, said: “The UK market may have come off the boil slightly where house price growth is concerned, but property values are still up annually while supply levels remain subdued and continue to be exceeded by buyer demand as a result of mortgage affordability.

“These are not the ingredients for a market crash and it highly unlikely that we will see anything other than stable growth and an uplift in market activity throughout the remainder of the year.”

House prices in the three months to June were 1.8% higher than the same period a year earlier; marginally lower than the 1.9% annual growth in May

In the latest quarter (April-June) prices were 0.7% lower than in the preceding three months (January-March 2018). On a monthly basis, prices rose by 0.3% in June to £225,654.

Home sales grew by 1% to 99,590 in May. In the three months to May sales were 4.8% lower than in the same three months a year earlier.

Russell Galley, managing director, Halifax, said: “House prices continue to remain broadly flat, with the annual rate of growth marginally slowing from 1.9% in May to 1.8% in June.

“Activity levels, like house price growth, have softened compared with the final months of last year. Mortgage approvals have been in the low range of 63,000 to 67,000 since the start of the year, whilst home sales have remained flat so far this year.

“This is in contrast to the continuing strength of the UK jobs market with job creation still strong and pressure on household finances easing as real income growth edges up.

“At the half way stage of the year the annual rate is within our forecast range of 0-3% for 2018. We continue to see very positive factors of continuing low mortgage rates, great affordability levels and a robust labour market.

“The continuing shortage of properties for sale should also continue to support price growth.”

This weakness reflects the slowdown seen in mortgage approvals over the past year. Completed sales since December have held steady, averaging close to 99,000 per month.

Housing activity remains steady. After falling for 26 months in succession, new instructions edged up in May.

Furthermore average stock of homes for sale on estate agents’ books held broadly steady, albeit close to historic lows.

On the demand side, new buyer enquiries fell again, although the pace of decline has slowed since the start of the year.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Once again, we are seeing a market in subdued mode supported broadly for some time by low interest rates and unemployment, as well as more specifically by low stock.

“These figures, though a little historic, command attention as Halifax is the country’s biggest mortgage lender.

“On the ground, we have reached the limit of what many buyers can afford so this is not a correction, more a realignment of prices to reflect changes in circumstances and to address the potential standoff between buyer and seller.”

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