The resilience of the housing market in the face of four interest rate rises in nine months was underlined on Friday by the FT’s house price index for April, showing stable house price inflation.
Video
Are interest rates an effective tool for cooling the housing market? Chris Giles, economics editor, examines the evidence
Annual house price inflation in April was 8.4 per cent, unchanged from each of the three previous months. The monthly figures followed a similarly consistent pattern with house prices rising by 0.7 per cent last month, from March’s 0.6 per cent increase.
Peter Williams, chairman of Acadametrics, which produces the FT house price index, said the results indicated that: “Nationally house price increases have slowed and flattened out. This has been our view for a number of months and most of the other indices are now indicating similar trends.“
The average house price is now £219,145 but the gap between London and other regions remained wide.
London house prices accelerated to an annualised 13.3 per cent in the three months to March, well above the national average of 8.5 per cent. Apart from the south-west, where house prices grew at an annualised 8.6 per cent, in all other regions price rises were below the average. On a monthly basis, six of the nine regions showed falls in price growth.
Stripping out the capital, overall FT house price inflation for England and Wales would fall to 7.1 per cent over the year from 8.4 per cent.
Mr Williams said the Bank of England’s quarter-point rise in interest rates on Thursday, to 5.5 per cent would increase affordability pressures. “We expect to see the market remaining moderately subdued. Underlying mortgage growth is easing and consumer confidence, while slightly up on the month, is low.”
He also noted that despite the introduction of compulsory home information packs next month, “we still have not yet seen a great rush to put homes on the market even though it is traditionally a busy time of year for the market. It may yet turn out to be a non-event, perhaps housing’s equivalent of the millennium bug.”
The FT house price index is based on Land Registry data covering every transaction in England and Wales, not just those backed by a mortgage, and is much more comprehensive than the surveys by the lenders Halifax and Nationwide.
On Thursday, Halifax, the largest lender, found house prices rising at their slowest pace this year. Nationwide said last week that house prices grew of 2 per cent in the three months to April, the smallest quarterly increase since since August. However, the annual rise on its index was 10.2 per cent last month, up from 9.3 per cent in the year to March.
