Halifax report house price rises dip in July

Rampant house price rises at the start of the year have shown their first dip according to a new survey released by the Halifax.

In July the average house price rise dropped off to 0.7 percent, which has been interpreted as the first sign that the early year rises of almost 11 per cent may be tailing off. The average property price was put at £92,718, up from £84,556 in July 2000 – a rise of 9 per cent since last year.

Martin Ellis, Halifax's Group Economist, said: "House prices rose by 0.7 per cent in July the lowest monthly increase since January. The annual rate of house price inflation remained broadly unchanged at 9.6 per cent.

“The buoyancy in house prices is being driven by a combination of the recent series of mortgage rate cuts and healthy household confidence. Consumer sentiment has remained high notwithstanding the global economic slowdown, the recession in the UK manufacturing sector, and the fall in share prices. The continuing fall in unemployment and the record high level of unfilled job vacancies have been key factors underpinning this confidence so far this year.

“The UK economy, however, is not isolated from the deterioration in world economic conditions, and there are signs that the difficulties faced by manufacturers are spreading to the rest of the economy. Slower economic growth - apparent in the decline in gross domestic product growth in the second quarter - is likely to curb housing demand and cause house price inflation to ease over the coming months."

The housing sector often experiences a peak in house price rises in the summer months. While last year’s house price increases peaked at almost 16 per cent, it is thought unlikely that this year will see a repeat of this level of increases.

Even though certain areas in the South East England have rates approaching this level, most analysts expect the underlying trend for the year to average out at around 10 per cent.

(SP)