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September house prices up 1.6%, says Halifax

Tuesday 6th October 2009

Increased demand and the low supply of properties available for sale pushed up house prices 1.6 per cent in September, the fifth rise this year, said Halifax

Martin Ellis, housing economist, said: “House prices nationally have risen by 1.7 per cent since the end of 2008. The marked improvement in affordability due to the reduction in both property prices and interest rates since mid 2007 has been a key factor in stimulating higher demand.”

However, he said rising unemployment and low earnings growth are likely to check the market at some point because the rising numbers of people placing their properties up for sale is likely to ‘loosen’ the market and curb price rises.

The Halifax said the average house price in the UK in September at GBP 163,533 had risen 1.7% (GBP2,672) in nine months, since the end of 2008.

Prices have risen by 5.9 per cent since reaching a trough in April 2009, showing an increase in the average price of just over GBP 9,000. The national average price is currently at a similar level to that in mid 2005 and house prices in September were 7.4 per cent lower on an annual basis, said the Halifax.

The annual rate of change has fallen markedly from a low of -17.7 per cent in April.

The lender also said the proportion of disposable earnings devoted to mortgage payments has fallen significantly over the past two years. Nationally, typical mortgage payments for a new
borrower have fallen from a peak of 48 per cent of average disposable earnings in 2007 Quarter 3 to 30% in 2009 Quarter 3. This key measure of affordability is at a more favourable level
than the average over the past 25 years (37%) and has been a major factor pushing up housing demand, it said.

However, activity has improved from a low of –64% in November 2008 to – 17% in June this year, according to the Land Registry.

Bank of England figures show that the number of mortgages approved to finance house purchase has almost doubled from 27,400 in November 2008 to 52,300 in August 2009, on a seasonally adjusted basis.

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