House prices up 1.8% in February

The annual rate of house price inflation remained unchanged at 9.9% for the third successive month, but on a quarterly basis the rate of house price growth has more than halved.

Prices rose 2.3% in the past quarter, following 4.7% growth in the previous three months.

Martin Ellis, chief economist at Halifax, says a shortage of new and second-hand properties available for sale has continued to push house prices up so far in 2007.

He adds: “However, there are signs emerging that the increase in interest rates since last summer is dampening housing demand but this is yet to feed through to house prices.

“Pressure on householders’ finances due to negative real earnings growth, higher interest rates and above inflation council tax rises are likely to curb housing demand, resulting in a gradual slowdown in house price inflation later this year.”

The latest Bank of England figures show mortgage approvals to fund house purchase in January were 6% lower than the recent peak from November 2006 and the latest RICS monthly survey shows new buyer enquiries fell in January.

But Halifax says the market remains very tight with low supply – both in terms of new house-building and second-hand properties available for sale – exerting upward pressure on house prices despite the easing in demand.

If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7034 2680 or email [email protected].

IFAonline

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• Mortgages
• Halifax
• house prices