House prices increased by 1.2% in November. Overall, prices have increased by 4.7% over the past six months.
On an annual basis, house prices are up 4.5%, significantly below the 16.8% annual growth rate recorded in November 2004.
- The number of mortgage approvals to fund house purchase increased for the fourth successive month in October, according to the Bank of England. The number of loans, at 113,000, on a seasonally adjusted basis, was 35% higher than in October 2004.
The high level of employment and good earnings growth continue to underpin housing demand.
The slowdown in the UK economy over the past year and the historically high level of house prices relative to average earnings are expected to curb the recent improvement in housing demand and prevent another sustained period of sharply rising property values.
Commenting, Martin Ellis, Chief Economist, said:
"House prices increased by 1.2% in November. Overall, prices have increased by 4.7% over the past six months. The high level of employment and good earnings growth continues to underpin housing demand.
The slowdown in UK economic growth over the past year and the historically high level of house prices relative to average earnings are, however, expected to curb the recent improvement in housing demand and prevent another sustained period of sharply rising property values."
ABOUT THE HALIFAX HOUSE PRICE INDEX
The Halifax House Price Index is the UK's longest running monthly house price series with data covering the whole country going back to January 1983. The Index is typically based on around 15,000 house purchases per month, and covers the whole calendar month. From this data, a "standardised" house price is calculated and property price movements on a like-for-like basis (including seasonal adjustments) are analysed over time. Properties over £1 million are included and the index is seasonally adjusted with the seasonal factors updated monthly.
Housing market activity improves
The number of mortgage approvals to fund house purchase increased for the fourth successive month in October, according to the latest Bank of England figures. The number of loans, at 113,000, on a seasonally adjusted basis, was 35% higher than in October 2004 and was at its highest level since May 2004.
Halifax Estate Agents have seen a rise in sales in recent months with sales higher than a year earlier for the first time this year in October.
Labour market strengthens
After a lull in employment growth in the second quarter of 2005, there was a improvement in labour market activity in the third quarter. The total number in employment rose by 123,000 in Quarter 3 2005 following an increase of only 12,000 growth in Quarter 2. Over the past year, the level of employment increased by 333,000 compared to an increase of 243,000 in the year to September 2004.
The UK economy is currently in a slower growth phase
Overall economic activity has grown for five consecutive quarters by 0.5% or less, which is below the economy's long-term historical rate of 0.6% per quarter. On an annual basis, GDP growth was 1.7% in Quarter 3 2005 compared with the long-term average of 2.5%. Nevertheless, this was still the 53rd consecutive quarter of growth in the UK economy.
The manufacturing sector has been the main source of weakness in the economy with a 0.1% fall in activity over the past year. The service sector, however, continues to grow with an increase in output of 2.3% over the year to Quarter 3 2005. Financial and business services had the strongest rate of growth for the year, at 3.1%. Construction activity was up 2.0% over the year to September 2005.
But signs of strengthening retail spending
Weaker spending on the high street has been one of the more visible signs of the slowdown in the UK economy in 2005, but recent data points to some stabilisation in retail trade. Sales have risen for three consecutive months up to September 2005, according to the latest ONS data, marking the first time this has happened since June 2004. Spending on household goods has also risen for three consecutive months following falls in six out of the previous twelve months to June 2005, a development that probably reflects the recent pick-up in the housing market.
