Wednesday, September 08, 2010
Conflicting house price signals
Posted by David Smith at 09:00 AM
Category: Thoughts and responses

The Halifax, part of the Lloyds Banking Group, reported that house prices rose by 0.2% in August, following a 0.7% rise in July. Prices are 4.6% up on a year earlier, though broadly flat since the start of the year. The significance of the Halifax report is that the Nationwide, its main rival in the house price index business, reported price falls in both July and August.

Which one's right? The Halifax led the market into the downturn three years ago but these periods of divergence are not unusual. The Halifax's verdict is that the market is pretty flat, in terms of both activity and prices.

This is Martin Ellis, its housing economist: "Prices are now at a very similar level to that at the end of last year. Activity has also been largely static since the start of the year. These developments suggest that the market is broadly stable with house price inflation having cooled since last year when supply shortages helped to push up prices. The improved economy, strengthening labour market and low interest rates are all supporting housing demand. We expect that UK house prices will remain static overall in 2010." More on the index here.