Mortgage approvals still down year-on-year

The latest house price data from Halifax has revealed that, despite continued high levels of affordability, the market is fairly stagnant.

House prices rose by 1.5 per cent in March to a record high of £227,871, but this came at the end of a quarter when prices actually dipped by 0.1 per cent. This is the second successive three-month period where this has happened.

Overall, prices were up by 2.7 per cent year-on-year, which tallies with Halifax’s own expectation that house price inflation will be at or below three per cent through the course of 2018.

A key reason for the low price increases is the softening of the market, with the number of people wanting to buy homes declining despite high employment levels and affordable mortgages. This suggests that there is no imminent prospect of a large number of renters moving on to become owner-occupiers anytime soon. At the same time, it offers property investors more affordable prospects.

Commenting on the figures, Halifax managing director Russell Galley said: “Activity levels, like house price growth, have softened compared with a year ago. Mortgage approvals are down compared to 12 months ago, whilst home sales have remained flat in the early months of the year.

“This lack of direction in the housing market is in stark contrast to the continuing strength of the UK jobs market.”

He added that the lack of purchases is occurring despite the apparent job security of the highest level of employment since 1975, as well as “continuing low mortgage rates” and “great affordability levels”.

This may be down to factors such as Brexit and the uncertainty that brings for the longer-term economic health of the nation. However, whatever the underlying reasons, the trend of low house price inflation has been persistent in the past 18 months and may remain so for some time to come, not least because even in the post-Brexit transition period there will still be some uncertainty about the future.