Despite average UK house prices rising to £219,000 in July, price growth has hit its slowest rate in over four years, according to the latest figures from Halifax.
The rise of 2.1 per cent brings the average price up from around £214,000 and is the lowest annual rate of increase since spring 2013, this despite unemployment levels in the UK being pushed down to 4.5%, the lowest since 1975.
Managing Director of Halifax Community Bank, Russell Galley suggested this might be down to non-correspondent wage growth, saying,
“The rise in the employment level by 175,000 in the three months to May helped push the unemployment rate down to 4.5 per cent, the lowest since June 1975. However, this improvement in the jobs market has not, as yet, boosted wage growth, resulting in earnings rising at a slower rate than consumer prices.”
High employment levels are normally regarded as an indicator of increasing spending power, likelihood to receive mortgages and confidence amongst home buyers, however the report found this hadn’t been born out in the number of mortgage approvals for house purchases, which fell in volume by 0.7 per cent between May and June this year. The figures show the squeeze on buyer affordability currently ongoing in the market as years of rapid price increases alongside a lack of homes available for sale. As Galley continued,
“This squeeze on spending power, together with the impact on property transactions of the stamp duty changes in 2016 now being realised, along with affordability concerns, appear to have contributed to weaker housing demand.”
Looking forward towards 2018 it’s more important than ever we as industry look at our own role in guiding the country’s approach to the housing market, guaranteeing we are not locking people out whilst ensuring we don’t return to the reckless lending of days gone by. It is our role to educate, as for instance I saw Ray Boulger doing earlier in the week, advancing the case for 100% LTV mortgages if appropriate. They may not be the answer, they certainly aren’t the only answer. But the industry needs to have a discussion on how to ensure we avoid pricing a generation out of home ownership.
I certainly don’t have the answers, nor will any one person at the Mortgage Conference. But the agenda needs to be shaped and the conversation started, those at the conference will be part of that conversation. Make sure you are too. Help future proof the housing market, and your industry with it.