30th April 2015
Property prices in England and Wales fell 0.8% month-on-month in March taking the annual house price inflation rate down to 5.3%, the lowest rate since February 2014, according to the Land Registry.
March’s total follows appreciation of 6.1% in February, 6.4% in January and a 52-month high of 8.4% in August.
The Land Registry numbers however can lag other indices as its numbers are based on completed house transactions, and already other measures have registered data for April.
For example, Howard Archer, chief UK and European economist at IHS Global Insight highlighted that the Land Registry’s results are in contrast with Nationwide’s numbers, which reported that house prices rose 1% month-on-month in April, marking the largest increase since June 2014.
Archer asserted that despite the 0.8% monthly drop in March, he maintains the view that house prices are likely to rise by around 5% in 2015.
He added: “There are signs that housing market activity is now slowly turning around after weakening during much of 2014 and we suspect it will gradually improve over the coming months.”
Notably, the British Bankers Association reported that mortgage approvals for house purchases rose modestly for a third month running in March to a six-month high of 38,751.
In addition, the Bank of England’s latest credit conditions survey released in early-April showed that lenders expect demand for mortgages to pick up in the second quarter.
Archer said:” We expect support for housing market activity to come from the recent Stamp Duty reform, very low mortgage rates, elevated consumer confidence, a pick-up in earnings growth and rising employment. Under the Stamp Duty Reform enacted in December, it is estimated that 98% of house buyers will now pay less stamp duty.
“Furthermore, it currently looks probable that the Bank of England will hold off from raising interest rates until 2016. It is also likely that limited supply of houses will provide support to house prices over the coming months.”