Halifax reports that house prices increased by 1.8% in February, to an average of £192,233. The annual rate of house price inflation is unchanged at 9.9% for the third successive month. The standardised average house price (seasonally adjusted) is now £192,233.
On a quarterly basis the rate of house price growth has more than halved. Over the past three months, UK house prices have increased by 2.3%, compared to 4.7% in the previous three months. Other housing market indicators suggest a modest slowdown in activity is emerging. New buyer enquiries fell in January, following a slowing in the final three months of 2006. Mortgage approvals in January were 6% below the peak seen in November 2006. Negative real earnings growth is also putting pressure on householders' finances.
Low supply of both new housebuilding and secondhand properties available for sale is continuing to exert upward pressure on house prices, particularly in London. The ratio of completed home sales to the stock of available property increased further in January, making market conditions the tightest for more than two and a half years.
Ahead of the budget, Halifax notes that property tax revenues in the UK - including inheritance tax and stamp duty land tax - are the highest (along with the US) in the OECD. Property taxes as a percentage of total taxes in the UK have risen from 10.4% in 1995 to 12.0% in 2004 according to the latest statistics.
Commenting, Martin Ellis, chief economist, said: "House prices increased by 1.8% in February, leaving the annual rate of house price inflation unchanged at 9.9% for the third successive month. On a quarterly basis the rate of house price growth has more than halved. Prices rose 2.3% in the past quarter, following 4.7% growth in the previous three months. A shortage of both new and secondhand properties available for sale has continued to push house prices up so far in 2007, particularly in London. However, there are some signs emerging that the increase in interest rates since last summer is dampening housing demand but this is yet to feed through to house prices. Pressure on householders' finances due to negative real earnings growth, higher interest rates and above inflation council tax rises are likely to curb housing demand, resulting in a gradual slowdown in house price inflation later this year."
