House prices seem to only ever be on the rise, which means that new figures from Halifax showing that there's been a slight blip of late could come as welcome news to those struggling to build a deposit. But how reliable is this kind of measure, and what does it mean for the future of house prices?
The latest Halifax House Price Index shows that UK house prices fell on a monthly basis, with the average standing at £209,495 in February - a drop of 1.4% from January's figure of £212,502. This almost reverses the increase of 1.7% recorded the previous month and is the first monthly reduction seen since September last year, but that doesn't necessarily mean that house prices have started a downward spiral.
Far from it – house prices are still well above the average seen this time last year (the average UK house price stood at £192,932 in February 2015), and both quarterly and annual growth rates remain strong, which are thought to be more reliable indicators of the overall trend than the often volatile monthly reading.
In fact, prices rose by 3% on a quarterly basis, the highest seen since June 2015 (3.3%), and by 9.7% year-on-year, with the latter being unchanged from January. This suggests that, despite house prices falling on a monthly basis, the overall pace of growth is still strong, so prices may not be falling to any extent – but there are tentative suggestions that the rate of growth could begin to ease.
Martin Ellis, Halifax housing economist, said that prices "continue to rise at a robust pace, driven by a significant imbalance between supply and demand". However, he pointed out that, while the situation is likely to continue over the coming months, there are signs that the supply issue may be beginning to improve: figures from RICS show that new instructions by sellers (in other words, the number of homes put up for sale) rose for the second consecutive month in January, while the level of housebuilding rose "significantly" in 2015.
"Further ahead, increasing affordability issues, as house price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease," he concluded, so while we may not see dramatic price drops, there's a chance that prices won't push homes too far out of reach, and that affordability hopefully won't become too stretched.
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