News Column

Housing market may finally be cooling down

May 9, 2014

MICHAEL BIRD



THE RECENT upswing in housing market activity may be moderating, with an early indication from one bank that growth in house prices could be reaching a plateau.


House prices increased by 8.5 per cent in the 12 months to April, according to Halifax - slower than the 8.7 per cent increase in the year to March. The year-on-year figure for house price growth had risen continually during much of 2013.


Prices also dropped between March and April, down 0.2 per cent, following a 1.2 per cent drop between February and March. The declines marked the first consecutive drop in two months since the autumn of 2012.


"The recent more variable news on the housing market may ease some concern that a housing market bubble is developing and the recently introduced stronger rules on mortgage lending may well have a significant containing impact - but it is still a significant danger that policymakers must monitor closely and react to if necessary," said IHS Global Insight'sHoward Archer.


Berenberg's Robert Wood added that the Bank of England will likely tighten affordability criteria for housing next month, and could limit Help to Buy in September.


Further figures from the Council of Mortgage Lenders (CML) showed that the number of repossessions rose slightly during the first quarter of the year, up to 6,400, a 4.9 per cent increase from the last three months of 2013.


However, the figure is still down by a fifth from the same period a year earlier, and the number of mortgages with arrears worth more than 2.5 per cent of their mortgage balance is at its lowest since the beginning of 2008.


Though house-building remains anaemic when compared to the years before the crash, figures also released this morning by the National House Building Council (NHBC) shows there were of new homes 33,816 new homes were registered in the first quarter, an annual increase of seven per cent.


"We have been clear that this growth is from a historically low base. The UK still has a chronic shortage of new homes so we must not get complacent in our continued attempts to meet the growing housing needs of the population," added NHBC's Mike Quinton.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: City A.M. (UK)


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