UK house prices in the first three months of the year were up 2.7 per cent compared to the same period for the previous year, according to the latest house price index from Halifax, an increase on the 1.8 per cent growth recorded in February.
Prices grew 1.5 per cent in March, following a 0.5 per cent increase in February - which EY Item Club's chief economic advisor Dr Howard Archer said was "the sharpest raise since August".
However, the index showed that house prices in the last quarter were 0.1 per cent lower than in the the last three months of 2017, the second consecutive decline on this measure.
“The annual rate of growth continues to be in a narrow range of under 3 per cent, though the average price of £227,871 is a new high,” said Russell Galley, managing director at Halifax. “In the coming months we expect price growth to remain close to our prediction of 3 per cent despite the very positive factors of continuing low mortgage rates, great affordability levels and a robust labour market.”
Last month’s Halifax index showed that house prices had fallen 0.7 per cent across the UK in the three months between December and February, the first quarterly fall in nine months. The average house price in Britain hit £224,353 during February.
The survey also showed that mortgage approvals for house purchases contracted nearly five per cent in February. After the sharp rise in January, February saw approvals fall by 4.8 per cent, a decline of 7 per cent compared to the same time last year.
The housing market continues to be subdued, with the number of new instructions has now falling for 24 consecutive months – the worst sequence for nine years, with the figure for unsold stock at a record low.
Still, the survey also showed that mortgages in the UK have reached their most affordable level in a decade. Typical mortgage payments accounted for less than a third of homeowners’ disposable income in the fourth quarter of 2017 compared to almost half in same period in 2007.
London remains among the weakest performers in terms of house price growth, with the latest Nationwide house price index showing prices were down one per cent year-on-year. Figures from Your Move released last month showed that prices in parts of London had fallen as much as 15 per cent over the last year.
The buy-to-let market continues to perform strongly, however, with a study from Ludlow Thompson published yesterday showing that the number of buy-to-let investors in the UK hit an all-time high of 2.5m last financial year. The number of buy-to-let investors has increased 27 per cent over the last five years.