The latest Halifax House Price Index shows that house prices rose by 1.1% in April, the smallest monthly rise so far this year and the second lowest since July 2006. The annual rate of house price growth fell slightly to 10.9% from 11.1% in March.
The number of mortgage approvals to fund house purchase fell from a seasonally adjusted 118,000 in February to 113,000 in March, the lowest level since April 2006. Buyer interest in properties declined for the fourth consecutive month in March.
Healthy, albeit easing, demand together with a shortage of both new and second-hand homes for sale continues to drive house prices up. The stock of unsold property on estate agents' books fell in March, making market conditions the tightest for nearly three years.
Negative real earnings growth, together with the effects of the interest rates rises since last summer, is exerting pressure on householders' finances. These pressures, exacerbated by a probable interest rate rise in the near-term, are expected to further constrain housing demand over the coming months. As a result, house price inflation is likely to ease.
Commenting, Martin Ellis, chief economist, said: "House prices increased by 1.1% in April, the smallest monthly increase so far this year and the second lowest since July 2006. There is accumulating evidence of a slight easing of conditions in the housing market with further signs of moderation in both demand and activity in the past month."
