The Halifax National House Price Index has just be released for June 2006. The key points are:
* House prices fell by 1.2% in June. House prices increased by 4.5% in the first half of 2006 with a 2.6% rise during 2006 Quarter 2.
* House prices increased in all regions during the second quarter with the exception of Wales. The biggest rises were in Scotland (5.7%), South West (3.8%) and East Anglia (3.5%). The smallest increases were in North West (0.2%) and North (0.9%). Wales showed a slight fall (-0.8%), reflecting the increasing affordability difficulties for buyers in the Principality.
* The pick-up in house price inflation in London and the South East over the past year contributed to a slight increase in the ratio between prices in the south and north in 2006 Quarter 2. This follows four years of almost continuous decline in the ratio, tentatively suggesting that the north/south divide is at, or slightly passed, its low point in the current cycle. The average property price in the south stood at 1.58 times the average in the north in 2006 Q2 compared with a peak of 2.19 times in 2002 Q2.
* The level of activity appears to have moderated in recent months. The number of mortgage approvals to fund house purchase during March-May 2006 was down 4% compared with the preceding three months after adjusting for seasonal factors. Property transactions in England and Wales fell for the second consecutive month in May on a seasonally adjusted basis.
* Sound fundamentals, underpinned by a strengthening economy, high employment levels and low interest rates, will continue to support housing demand in the second half of 2006. The annual rate of house price inflation, however, is expected to ease, partly because the corresponding figures last year were strong. Pressure on householders' finances from utility bill and council tax rises, and speculation of higher interest rates, are also likely to moderate demand, causing house price inflation to decline.
Commenting, Martin Ellis, Chief Economist, said: "House prices fell by 1.2% in June. Sound fundamentals, underpinned by a strengthening economy, high levels of employment and low interest rates, will continue to support housing demand over the second half of 2006, ensuring that the market remains in good health. The annual rate of house price inflation, however, is expected to ease, partly because the corresponding figures last year were strong. Pressure on householders' finances from utility bill and council tax rises, combined with speculation of higher interest rates, are also likely to constrain demand."
House prices increased in all regions during the second quarter with the exception of Wales, with the biggest rises in Scotland (5.7%), South West (3.8%) and East Anglia (3.5%).
The smallest increases were in North West (0.2%) and North (0.9%). Wales showed a slight fall (-0.8%), reflecting the increasing affordability difficulties for buyers as a result of the very rapid rise in house prices over the past few years. The modest drop in Wales must be seen in the context of an increase of 97% in the past four years.
Southern England - Greater London, South East, South West and East Anglia - accounted for two-fifths of the overall rise in UK house prices in the first two quarters of the year. This is significantly different to 2005 when rising house prices in the south contributed less than one-quarter to the increase in UK house prices.
