According to data from the Halifax’s latest monthly price index, a property price slowdown is on the cards, reports the Financial Times.
Despite house price inflation hitting 8.8% over the past year, the lender’s data found that prices were down 0.4% month-on-month from September to October this year, with only a very slight quarterly rise of 0.8% from the second to the end of 2014’s third quarter.
The figures reveal that the increase was the slowest quarterly rise since December 2012, when property prices went up by 0.7%.
The housing economist at the Halifax, Martin Ellis, claims the figures show that activity continues to slow down, with mortgage approvals in September declining for the third month in a row to a 14-month low. In addition, property sales are at the lowest level since last October. This slowdown in demand has balanced out the supply-and-demand issues we have witnessed recently, Ellis continues.
However, just because it may feel as if the property market is cooling down, we need to remember that this year has seen an annual increase of 8.8% – and this level of growth is simply not sustainable.
In order for the market to be steady and strong in the long term, property prices will need to grow at a parallel rate to wage inflation.
In addition, lenders need to continue to be dedicated to government schemes such as Help to Buy and higher loan-to-value lending, even though the market appears to be easing.