House price growth cools in September, says Halifax

House price growth has cooled, according to the latest Halifax House Price Index.

House prices in the three months to September were 0.1% lower than in the previous three months (April-June). This compared with a 0.7% rise in August and is the lowest quarterly rate since November 2012 (-0.3%). The quarterly rate of change has been on a downward trend since reaching 3.0% in February.

Prices in the three months to September were 5.8% higher than in the same three months a year earlier. This compared to 6.9% in August and continues the downward trend seen over the past six months after the annual rate reached 10.0% in March. September’s 5.8% is the lowest yearly growth rate since August 2013 (5.4%).

House prices increased by 0.1% between August and September. This small increase followed two consecutive monthly falls. The quarter on quarter change is a more reliable indicator of the underlying trend.

The average age of a UK first-time buyer is now 30, but this masks a seven-year age gap among those coming on to the housing ladder, according to separate recent research from Halifax. The youngest first-time buyers are in Carlisle in Cumbria and Torfaen in south Wales where the average age is 27. The oldest average first-time buyer age (34) is in areas including Slough in Berkshire and the London boroughs of Barnet and Ealing.

Martin Ellis, Halifax housing economist, said:

“House prices in the three months to September were largely unchanged compared with the previous quarter. The annual rate of growth eased from 6.9% in August to 5.8%.

“The housing market has followed a steady downward trend over the past six months with clear evidence of both a softening in activity levels and an easing in house price inflation.

“The reduction in annual house price growth from a peak of 10.0% in March to 5.8% six months later remains in line with our forecast at the end of 2015. A lengthy period where house prices have risen more rapidly than earnings has put pressure on affordability, therefore constraining demand. Very low mortgage rates and a shortage of properties available for sale should, however, help support price levels over the coming months.”

Ian Thomas, Co-Founder and Director of online mortgage lender LendInvest, said:

“Recent months have seen a number of external factors chipping away at demand, such as Brexit, the additional Stamp Duty charge on second homes and the traditionally slow summer. The confirmation that the Help to Buy scheme will end later this year is another one. The initiative has been extremely popular, so it will be interesting to see if its conclusion will drive down demand and therefore sales of new build properties.

“It is good that the Government has made housebuilding such a significant part of their party conference over the last week, with new measures designed to improve the rate at which we build new homes. The time for talking about the housing shortage must end – we need action, not words.”

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