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| House price inflation easing off | House price inflation easing off |
| (about 1 hour later) | |
| House price inflation is now easing off, according to the latest monthly survey from the Halifax. | House price inflation is now easing off, according to the latest monthly survey from the Halifax. |
| The mortgage lender says that in May, house prices rose by just 0.3%, pulling the annual inflation rate down from 10.9% to 10.6%. | The mortgage lender says that in May, house prices rose by just 0.3%, pulling the annual inflation rate down from 10.9% to 10.6%. |
| It said this was clear evidence that the property market was now reacting to the four increases in interest rates since last summer. | It said this was clear evidence that the property market was now reacting to the four increases in interest rates since last summer. |
| The Halifax now puts the average UK house price at £196,893. | The Halifax now puts the average UK house price at £196,893. |
| Slowing down | Slowing down |
| May was the second month in a row that the Halifax has recorded a slowdown in the pace of annual house price inflation, which reached a recent peak of 11.1% in March. | May was the second month in a row that the Halifax has recorded a slowdown in the pace of annual house price inflation, which reached a recent peak of 11.1% in March. |
| "The recent slowing down in monthly house price inflation, together with further evidence of moderation in housing market activity, suggest that the interest rate rises since last summer are having an impact on the market," said the Halifax's chief economist Martin Ellis. | "The recent slowing down in monthly house price inflation, together with further evidence of moderation in housing market activity, suggest that the interest rate rises since last summer are having an impact on the market," said the Halifax's chief economist Martin Ellis. |
| The mortgage lender pointed to a continued slide in enquires from new buyers, as reported by estate agents, and the recent drop in new mortgage approvals recorded by the Bank of England. | The mortgage lender pointed to a continued slide in enquires from new buyers, as reported by estate agents, and the recent drop in new mortgage approvals recorded by the Bank of England. |
| The Halifax predicts a further easing of house prices during the year, but Mr Ellis suggested this would only be moderate. | The Halifax predicts a further easing of house prices during the year, but Mr Ellis suggested this would only be moderate. |
| "Solid economic conditions and high employment support housing demand," he said. | "Solid economic conditions and high employment support housing demand," he said. |
| "The market remains supported by solid economic foundations which, together with supply shortages, will continue to support prices," he added. | "The market remains supported by solid economic foundations which, together with supply shortages, will continue to support prices," he added. |
| More expensive | |
| Meanwhile a new government financed think-tank has predicted that under current house building plans, houses will eventually cost ten times average salaries in just under 20 years time. | |
| The prediction comes from the National Housing and Planning Advice Unit, headed by Professor Stephen Nickell, a former member of the Bank of England's monetary policy committee which sets interest rates each month. | |
| The unit will advise planners and property developers in England. | |
| Even though new house building is expected to rise from 168,000 a year in 2006 to 190,000 a year in the next decade, Professor Nickel says this will be outstripped by the expected growth in household numbers, which is predicted to increase even faster by 223,000 a year up to 2030. | |
| The centre has forecast that it will become more difficult for those in the bottom quarter of the income distribution to get on the housing ladder in the future. | |
| By dividing the price of the cheapest 25% of homes by the incomes of the lowest paid 25% of the population, it predicts that house price affordability will rise to 10 times earnings in 2026, compared to seven times earnings in 2007. |