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House price surge set to slow

Two new sets of figures show house prices continue to power upwards but property experts warn a slowdown could be in sight.

The latest Halifax house price index, published yesterday, said that prices in the three months to February were 9.7% higher year-on-year.

Nationwide's index, also published yesterday, showed house prices increased by 0.3% in February, while annual house price growth accelerated slightly to 4.8%.


Martin Ellis, Halifax housing economist, said prices had been driven by a significant imbalance between supply and demand, but there are signs that supply may be set to improve.

“Instructions for second-hand properties coming up for sale have increased in the past two months and the level of housebuilding increased significantly in 2015.

“Further ahead, increasing affordability issues, as house price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease.”

Nationwide's chief economist Robert Gardner said its figures showed house purchase approvals increasing sharply in January to almost 75,000, the highest for two years.

This was largely due to investors trying to beat the surcharge on stamp duty, which comes into effect on 1 April.

“This is likely to have brought forward a significant number of purchases, which in turn will probably result in a fall back in approvals during the spring and summer," Gardner said.

Jeremy Leaf, a former RICS chairman and north London estate agent, also expected activity to decline after April.

“On the surface there is not much happening but underneath there is a seismic shift in home ownership brought about by lack of affordability and inaccessibility to the property market.

“More people are having to rent for longer and even though mortgage rates are at record lows, being able to access those deals is a challenge that many will fail.”


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