House prices jump nearly four per cent in a year says Halifax

5th July 2013

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House prices have jumped by almost 4 per cent in the past year marking the highest rise for almost three years according to the latest figures from Halifax writes Philip Scott.

Growing confidence in the housing market and the economy, combined with a shortage of properties for sale, appear to be driving up costs with the annual growth rate in the three months to June, 3.7 per cent higher than in the same period last year.

In addition prices in the three months to June were 2.1 per cent higher than in the first three months of 2013, edging above the 1-2 per cent range recorded throughout the first five months of the year. This was the biggest increase on this measure since January 2010, at 2.9 per cent. Prices increased by 0.6 per cent in June, the fifth consecutive monthly rise.

Martin Ellis, housing economist, at Halifax says: “Activity has also improved in recent months. Both home sales and mortgage approvals for house purchase – a leading indicator of sales – increased in May.

“Improved confidence in both the housing market and the economy, combined with a shortage of properties available for sale, appear to be pushing up house prices. The Funding for Lending Scheme is also likely to be boosting the market by helping to reduce mortgage rates.

“There are also early indications that the Help to Buy: equity loan scheme may be stimulating demand. Despite these signs of improvement in the market, the still subdued economic background and weak income growth are expected to remain significant constraints on housing demand and activity during the second half of 2013.”

Commenting on the data, Howard Archer, chief UK and European economist at IHS says: “For the time being, we are sticking to our view that house prices will see solid but limited increases over the rest of 2013 and then strengthen more markedly in 2014.

“We believe that a strong upward move in house prices is unlikely for now given a still challenging and uncertain economic environment despite recent signs of improvement. In particular, very weak earnings growth argues against a substantial rise in house prices for the time being while consumer confidence is still limited compared to long-term norms despite the recent improvement.”

 

 

26 thoughts on “House prices jump nearly four per cent in a year says Halifax”

  1. Peter Walsh says:

    The proles may feel disaffected, disenfranchised and disenchanted but they still have a better material life/token pleasures than they did in earlier decades – in terms of people feeling badly off, we’re nowhere near how it felt in the 80s. Nobody out protesting in the streets. It’s grumbles not crumbles. Fuel/food costs were always one of the flash points for prole anger and they seem to be deflating away. What’s changing, evinced by the salary stats, is that we’re moving towards a long-term, low pay culture of service jobs, with people earning just enough to sustain the basic pleasures and with no hope of vaulting to higher wages/status/housing. The middle classes must be collapsing – witness how their kids are giving up the idea of buying their own homes in the capital. The asset boom in housing has made it very hard for most people to move up the ladder – you have to find hundreds of thousands of pounds just to get an extra room/bigger garden. Thus the rich will begin to hold all the assets – but the proles are too stupid to see that their house wealth/infaltion in fact beggars them. And as for the boom, well in the title to your piece you ask how it can be on when wages are falling? I’d go further. How can it be on when we have emergency low rates, have done for six years, and with no prospect of them going up until the Fed decides to rip up the debauched US stock market or the pound sinks into oblivion. How can we be booming when the people running finance have destroyed any rationale to a culture of thrift, hard work and saving, and encourage us all to take spiv buy-to-let risks in the hope of chasing shrinking yields because of all the cheap money they’ve printed sloshing around? How can we be booming when our political class is in crisis, rudderless, when they have no real mandate and are held in contempt, when they squirm and stutter in the face of events? How can we be booming when we’re repeating all the mistakes of the last smash and our leaders – and the nation – have no positive vision for the future, no sense of how we can work towards solving all the great state riddles like energy, transport and health care. How can we be booming when GDP per capita hasn’t budged an inch since the last bust?

    1. mickc says:

      Because “we”, being the majority of the people, are not booming. “We” are falling.
      The people have been sacrificed to save the banks and the “financial system”.
      Hence the disaffection with the political and financial class. The contempt in which they are held, and indeed shown in Scotland, is a shock to them. The people are not always supine.
      There is a real crisis in the UK, both financial and political.
      Of course, we have seen this before elsewhere…. the results were unpleasant.

    2. Forbin says:

      Bank-ocracy

      governance of the people by the Banks for the Banks.

      mickc is right – not going to be pleasant when it goes pete tong

      Forbin

      1. Forbin says:

        oops forgot to add

        don’t you get the feeling as well that this is just the eye of the storm ?

        nothing has changed really with the Banks….. or the debt they owe. I still posit they are still bust as hell

        Forbin

    3. Anonymous says:

      Hi Peter Walsh and welcome to my part of the blogosphere

      I see you have a few replies already so let me just add this which was confirmed earlier today by the ONS.

      “Annual GDP in current prices has been revised up by between £24.8 billion (2.6%) in 1999 and £97 billion (6.2%) in 2012. The average over the period 1997 to 2012 is a little over £50 billion
      (4.0%).”

      Do you feel any better off?

    4. Eric says:

      That’s a great description of what happens to a country and its economy when we embark on a multi-year experiment to see what happens if we stop the bankrupt from actually going bust.

  2. Paul C says:

    Shaun,
    I worthwhile topic today and I think purely a manifestation of the financial medicine we have used. Statehood has been propped-up with printed money and businesses prostrate themselves for the handouts that come from an ever more over-staffed, heath & safety conscious, inclusive and patrolled existence. The Productivity disaster is the canary in the coalmine, the indicator that confirms monopoly and monopsony rule the day.

    From a human perspective I meet so many people that do two jobs, also working in the pub in evening, do trade labour at the weekends. Does this make them more productive? Would the Germans think of 65 hours weeks as more productive?

    I think what is interesting is to project this trend forward, if indeed our “plan” as a nation is for “no change” then house prices must double again in 10 years, tons more zero-priced credit for homes and cars. more mothers and grandparents must sweat in part-time waste-of-time work, taxes must continue to rise on energy and transport, indeed taxing food is probably a necessary evil to feed “the beast”.

    1. Forbin says:

      VAT at 5% is already on Gas and Leccy

      lets go Greek and put all taxes on leccy – just after the rich brought Solar ….

      What could go wrong ?

      Forbin

      PS: its more likely a sugar tax ( again , we’ve been here before ) from all the MSM noise this year

  3. baldand says:

    Shaun, I love the Orwell quote at the end of your column. Replace football with ice hockey and it could be a description of working-class Canada.

    Regarding the calculation of real wages, it would seem to me that the ONS’ official position should be that real wages should be calculated using the RPIJ as the deflator, and given the alternatives: CPI, RPI, RPIJ, that would seem to be the best one. If I did my sums correctly real pay including bonuses for May-July 2014 was down 1.2% from a year ago using the RPIJ as a deflator, while real pay excluding bonuses was down by 1.1%. This isn’t such a strong decline as one gets using the RPI as deflator. If real wages really were down by 2% over the year, would growth be as strong as it is?

    I notice that Chart 6.1 of the UK Labour Market publication shows, not real pay, but total and regular pay along with the CPI series. So the table seems to be suggesting that if you did want to calculate a real pay series, this is the deflator that one would use. Given the genesis of the UK CPI as one of many Eurostat HICP series that were designed to be central bank inflation indicators and eschewed all claims to be cost-of-living indexes, this seems to be sending users of ONS series down the wrong path. George Osborne may decide to use the CPI as an upratings index to save some money, and that’s his right, but surely that is no reason for the ONS to cloud the notions of what is a proper deflator for income series and what isn’t.

    1. Forbin says:

      “If real wages really were down by 2% over the year, would growth be as strong as it is?”

      apparently we can afford copious amounts of coke and endless time with hookers……

      CPI = creative price index – items are chosen to go it for their ability to be cheated and or they go down , anything that may rise is automaitcally excluded

      GDP is so Gerry Mandered as to be worthless – I’m waiting for unicorn poo and fairy dust to be added to it …… soon I think

      Forbin,

      PS: Shaun, I think we’re getting to the point that economics is joining Sci Fi , Dune again perhaps?

    2. Anonymous says:

      Hi Andrew

      Thanks for your point on what deflator to use. Actually there is debate over the wage levels too as different organisations come to different answers. For example the Bank of England Agents have pay (presumably private-sector) rising at 2% per annum versus the 1% per annum of the ONS.

      As to how are we growing? Well the wages numbers are individual but more people are in employment so total wages have grown by more. We are back to the gap between the individual experience and the total aggregate.

  4. zummerzetman says:

    Add into the mix the prospect of more automation in the next ten years- crewless ships and driverless cars for example and as I mentioned the other day the downward pressure as a result of the globalised economy. Ultimately, wage packages of the western world are likely to be in steady decline and will meet the the rest of the world’s increasing wages half way as their respective standard of living increases.

    1. Anonymous says:

      Hi Zummerzetman

      If I use the Dune universe as often discussed on here then that seems a future which is much more Harkonnen than Atriedes. I wonder when the general population will realise that this may well not be a temporary phase?

  5. dutch says:

    If the employment ration is at 25 year highs,then it would be interesting to know if the number of people receiving govt assistance-tax credits,housing benefit,etc is also at 25 year highs.
    The growth in self employment doesn’t get a mention.

    1. Anonymous says:

      Hi Dutch

      Here is the continuing march of the self-employed. The numbers compared to this time last year are..

      “The number of self-employed people working full-time increased by 225,000 to reach 3.24 million.

      • The number of self-employed people working part-time increased by 143,000 to reach 1.30 million.”

  6. James Alexander says:

    In 1985, I found myself at an educational conference lunch, sat next to a brown-habited, tonsured Irish monk, a man then prominent in Irish education. In a (pathetic) attempt to open a conversation, I ventured something like “well, 1984 has come and gone, and Orwell’s nighjtmare doesn’t seem to have happened yet”. The unforgettable repy, offered with good-humoured charm and a rich Irish brogue (do build that in, visualise a monk somehow conveying the wisdom of an Irish Buddha as you read to get the full flavour) was: “Of course it’s bloody happened, dear boy – the bastards read the bloody book and realised the Stalinism Orwell was worrying about wasn’t one bit necessary, it could all be done with a smiling face, simple bribery, promotional PR instead of party dictatordhip, no Big Brother, no boot stamping on a human face forever, just bread and circuses….”. Notice in the years since how Orwells’ Big Brother has indeed been recast as harmless fun in at least two pappy bread and circuses TV-for-proles series.

    1. JW says:

      Indeed, closer to Brave New World in practice, but still with 1984 ‘threats’ to keep control ( ISIS and Putin being the latest).

      1. Anonymous says:

        The “terrorism” is reminiscent of the film Brazil.

    2. Anonymous says:

      This is why Brave New World was more prescient IMHO.

  7. Spero says:

    Shaun
    When you make the RPI comparison why not use RPIJ which ONS say is the better version?
    On house prices, most people are owners not buyers at any point in time. To show the impact of rising prices shouldn’t you add the value gain to the owners as well as subtract the cost to the buyers? That of course is the problem with including a capital investment in a consumption index

    1. Anonymous says:

      Hi Spero

      The answer to you first question is a long and potentially complicated one so let me just stick to one point. Consistently when asked or surveyed people estimate an inflation rate above that of any of the officially calculated rates. For example the Bank of England found this out earlier this month.

      “Question 1: Asked to give the current rate of inflation, respondents gave a median answer of 3.4%, compared with 2.9% in May.”

      Why then would you start with reform of the nearest measure you have to that which is the RPI? Surely you would start at the lower end.

      There was a lot of debate at the Royal Statistical Society on such matters when the RPI was reviewed but that gives a little flavour.

      As to the ONS say they are the mouthpiece for two other organisations. It was thought including by them that the Consumer Prices Advisory Committee was setting such guidelines but it turned out to be the National Statistician. Seeing as they provided over the shambles and debacle which is CPIH that is hardly a recommendation.

      There are plenty of issues with adding house prices to an inflation index. The purpose is to be a macroeconomic signal not to be theoretically consistent with the national accounts. We will soon see how the net acquisitions version works as Eurostat plans to release it this month.

  8. Anonymous says:

    Shaun,
    Poor productivity result of current management short term incentives no spend on training, minimise wages/NI with part time zero hour contracts keep market share & profits in short term to maintain lucrative employment for the few. Same goes for no new investment in these uncertain times use supply contracts (phoes4u?) or patents (Apple?) to reduce competition.
    Await to see Tesco tactics to try and maintain top spot!

  9. dannyboy says:

    Hi Shaun. Sorry, I’m reading your posts a couple of days late, but good to see the Orwellian twist. There’s so many analogies between 1984 and government behaviour that one wonders whether it is taught as an instruction manual at Eton. I think the sheer cheek of this behaviour is conveniently ignored by our press.

    In answer to the question you pose in your post title, there is no boom, it’s suggested existence is the result of data manipulation.

    I’m off to put a bet on the football.

    Danny

    1. Anonymous says:

      Hi Danny

      If you were beating on English Premiership football I hope that your money was on some offbeat results :) What a curious weekend…

  10. Anonymous says:

    Hi Forbin

    Actually in practice it is the claimed mathematics behind Premium Bonds that has been challenged (statistically average luck etc..) is it not? Also unless Scotland’s political establishment is very different to the rest of the UK your Who quote works rather well in addition to being a great song.

  11. therrawbuzzin says:

    If Scotland’s political establishment, and its govt in particular, was owned by the banks, do you think they’d be doing their best to subvert the democratic process here?

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