Housing market slows

Nia Williams

November 6, 2014

Confirming that the housing market is slowing, house prices in the three months to October rose by 0.8% – the third consecutive decline in the quarterly rate of increase and the smallest rise since December 2012.

Annual price growth in the three months to October slowed to 8.8% from 9.6% in September.

Commenting, Martin Ellis, Halifax housing economist, said: “Activity continues to decline with mortgage approvals in September falling for the third successive month to a 14 month low, whilst home sales are at their lowest level since October 2013.

“The associated weakening in demand has brought supply and demand into better balance.

“The economy is, however, continuing to grow at a healthy pace and employment is still rising. These factors should support housing demand over the coming months.

“However, while the chances of an imminent interest rate hike may have receded, a recent Halifax survey found that many borrowers are concerned about the impact a rise could have on their monthly mortgage repayments over the next 12 months. This concern is likely to curb buying intentions.”

Jonathan Hopper, managing director of Garrington Property Finders, said: “Most people are in agreement now that the market has cooled.

“The question is whether this is a long-term trend or simply a combination of the traditional seasonal slowdown and the market taking a short breather.

“If it’s the latter, we should see the market start to pick up in the New Year.

“Mortgage approvals continuing to fall is a worry though, but lenders are offering some great deals at the moment so this is likely to be as much to do with tougher lending conditions than buyers running for the hills.

“Saying that, buyers have become a lot more considered before making offers.

“They are not rushing in anymore and are viewing a number of properties before making a final decision.

“Overall, the market feels more stable and restrained. There is no suggestion that it’s topped out and we’re about to see prices plummeting.

“Consumer confidence remains high, and lenders are open for business with some fantastic fixed rate deals on the table.

“January and February should provide a better gauge of just what kind of health the property market is in.

“The one concern will be interest rate rises, and come the New Year, with the chance of a rate rise feeling a lot closer, this may start to play more on people’s minds.”

Alex Gosling, managing director of online estate agents Housesimple.co.uk agreed: “After a long spell of balmy conditions, the first frost has come to the housing market.

“Yet buyer demand remains strong and lenders are engaging in a price war, pushing the cost of many mortgages to historic lows.

“A period of calm and consolidation in house prices would be no bad thing if it gave helps buyers focus on factors other than just the fear of being left behind by spiralling prices.

“While it’s too early to say if this is a pause or a plateau, the property market’s fundamentals are strong and there’s every chance that after the Christmas lull it will return to growth – albeit at a more sensible level than that seen this year.”

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