UK house price growth hits 5.1%

House prices 8

UK house prices are more than five per cent higher than they were 12 months, ago, according to the latest industry figures, which suggest a continued upward trend.

Data compiled by Halifax for its monthly House Price Index shows that annual house price growth is remaining strong, with the 5.1 per cent February increase following a 5.7 per cent annual rise recorded in January.

A quarterly increase was also observed, with prices being 1.7 per cent higher in the three months to February than in the preceding quarter. This compared to the 2.3 per cent quarterly rate of change observed in the three months to January, suggesting momentum is being retained following the turn of the year.

Following a slight monthly decline in house prices in January, property values are on the up again, with a 0.1 per cent increase in February, taking the average price of a house in the UK to £219,949.

More good news for mortgages

The report also revealed that mortgage affordability is now significantly better than it was a decade ago. The proportion of disposable earnings that is spent on mortgage payments has improved by 18 percentage points since 2007.

Typical mortgage payments for new borrowers, which includes both first-time buyers and home movers, stood at 30 per cent of earnings in the fourth quarter of 2016, compared to the peak of 48 per cent recorded in the third quarter of 2007.

Total home sales are also continuing the recent upward trend, with sales in January being 4.9 per cent higher than the figure recorded in December 2016, at 104,820.

This is the highest figures observed since March 2016, when transactions were boosted ahead of the introduction of higher stamp duty rates on second homes and buy to let purchases, and is the fourth successive monthly increase.

Economic catalysts

Martin Ellis, Halifax housing economist, said that housing demand is being supported by an economy that “continues to perform well”, with increasing employment figures a notable contributor.

He pointed out that the annual rate of house price growth has nearly halved over the past 11 months, with other economic pressures expected to curb house price growth during 2017, although growth is still expected to occur.

The expectations support recent figures compiled by Knight Frank and IHS Markit for the monthly House Price Sentiment Index (HPSI).

The nationwide poll of homeowners and potential buyers found that people broadly expect prices to continue rising in the months ahead.

When questioned, 19.9 per cent of the surveyed respondents felt that the value of their home had risen over the last month, compared to just 4.9 per cent who believed prices had fallen, with the index now recording seven consecutive months of positive sentiment among owners and buyers alike .

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