In its monthly house price index, the lender recorded the standardised average house price in the UK (seasonally adjusted) was £197,461. Overall, house prices increased by 2.0 per cent in 2007 Quarter 2, less than the 3.0 per cent increase in 2007 Quarter 1 and well below the 4.2 per cent rise in 2006 Quarter 4.
It also found Northern Ireland is now the most expensive part of the UK outside London and the South East. In early 2005, Scotland was the only part of the UK with lower average house prices than Northern Ireland.
Martin Ellis, chief economist at Halifax, said: "House prices increased by 0.4 per cent in June, marking the second successive monthly rise of less than 0.5 per cent. Overall, prices increased by 2.0 per cent in 2007 Quarter 2, less than the 3.0 per cent increase in 2007 Quarter 1 and well below the 4.2 per cent rise in 2006 Quarter 4. These figures indicate that house price inflation is slowing.
The increases in mortgage rates and the persistence of negative real earnings growth in the early months of 2007 are expected to cause annual house price inflation to slow further over the coming months. Solid economic fundamentals and a shortage of housing supply will, nonetheless, continue to support house prices."
Northern Ireland records the strongest house price rise in 2007 Q2 ……
House prices increased in most regions during 2007 Q2. The biggest price rises were in Northern Ireland (8.5 per cent), Greater London (4.9 per cent), the North (4.3 per cent) and the South East (4.2 per cent). There were house price falls in the South West (-0.4 per cent), West Midlands (-1.1 per cent) and Wales (-2.8 per cent). These modest declines, however, should be seen in the context of the substantial price rises recorded in all three areas over the past five years: South West (63 per cent), West Midlands (81 per cent) and Wales (116 per cent).
Prices in Northern Ireland continue to be driven up sharply by a combination of a strong local economy, high levels of immigration and high demand for properties from second homebuyers and buy-to-let investors in the Republic of Ireland.
Northern Ireland has also seen the biggest price increase over the past year ……
Northern Ireland has also recorded the biggest price rise in the UK over the past year with an increase of 46.7 per cent, taking the average price to £228,790 in 2007 Q2. Prices increased most slowly in the West Midlands (5.5 per cent) and East Midlands (6.6 per cent) between 2006 Q2 and 2007 Q2.
Northern Ireland is now the most expensive part of the UK outside London and the South East
The dramatic increase in house prices over the past few years means that only London and the South East now have higher average house prices than Northern Ireland. In early 2005, Scotland was the only part of the UK with lower average house prices than Northern Ireland.
London has recorded the biggest price rises in Britain over the past year…..
Greater London (18.4 per cent) has recorded the biggest increase in prices in Britain during the last year, largely reflecting the strength of the capital's economy.
Average price in North goes above £150,000 ……
The average price in the North passed £150,000 for the first time in 2007 Q2, reaching £155,188. Scotland (£140,262) and Yorkshire & the Humber (£149,051) are the only parts of the UK where the average price remains below £150,000.
North/South divide in England widens……
The north/south divide in England has re-emerged over the past year. Greater London (18.4 per cent), the South East (14.0 per cent), East Anglia (10.9 per cent) and South West (10.0 per cent) have all recorded double digit house price growth since 2006 Q2. All the other English regions have seen single digit growth over the period. As a result, the difference between the average price in northern England1 and that in the south has widened from £81,681 in 2006 Q2 to £103,451 in 2007 Q2.
Housing market activity continues to ease……
Mortgage approvals to fund house purchase in the three months to May were 4 per cent lower than in the preceding three months, continuing the downward trend experienced since last autumn. (Source: Bank of England)
Higher rates and negative real income growth to cause house price inflation to slow……
The increase in mortgages interest rates – both for fixed and variable products – is curbing demand and will continue to act as a constraint over the coming months.
Negative real income growth is also expected to weigh down on housing demand. Real household disposable income – a measure of income after direct taxation and adjusted for inflation – fell for the second successive quarter in 2007 Q1 (-0.3 per cent in 2007 Q1 and -0.1 per cent in 2006 Q4). This is the first time that real income has declined in consecutive quarters since 1999. (Source: ONS).
Sound economic fundamentals……
A healthy economy and strong labour market continue to underpin housing demand. Gross domestic product (GDP) is confirmed to have grown at above its long-term average pace in the first quarter of 2007 with a quarterly 0.7 per cent increase. The UK economy is expected to have achieved its 60th consecutive quarter of rising activity in 2007 Q2, extending the longest unbroken stretch on record. The number of people in employment has increased by 87,000 over the past year, taking the total to 29.01 million. (Source: ONS)
…and supply shortages to support house prices
A shortage of both new housebuilding and secondhand properties for sale continues to support house prices. The stock of unsold property on estate agents' books has fallen this year and remains well below its long-term historical average. (Source: RICS)
