House prices only seem to be going one way at the moment, but happily, it doesn't look as though things are unsustainable. Prices may be rising but the pace of that growth is easing, with figures from Halifax showing that the rate of annual price inflation has slowed from last month, and on a monthly basis, prices have actually dropped.
The figures show that, in the three months to September, prices were 8.6% higher than they were in the same period a year earlier. It's still a notable increase, but it's lower than the rate of annual growth recorded last month (9%), while on a quarterly basis prices have only grown by 2%, down from last month's 3% and the lowest recorded since May.
Not only that, but prices have actually fallen by 0.9% from August, with the price of a typical UK property now standing at £202,859, down from £204,722. This is a dramatic change from the monthly increase of 2.7% recorded the previous month, which provides further evidence that prices are moderating.
The question is, will it last? Demand is still strong, while supply of suitable homes for sale remains at record low levels, which could continue to put upwards pressure on prices. Some types of home could be even more susceptible to these kinds of increases – flat prices, for example, have risen the most in recent years, with Halifax's figures showing that the price of an average flat has rocketed by 60% in the last decade, compared with 38% for all residential properties.
Activity in the housing market overall remains strong, with both mortgage approvals and house sales rising, which all adds up to a healthy market. It's therefore unlikely that prices will fall significantly in the near-future – as Martin Ellis, Halifax housing economist, says, "there is little reason to expect any fundamental shift in the key market drivers over the coming months" – but it's hoped that they won't rise too excessively, either.
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