| halifax Report on House Prices: August 2004
- House prices fell by 0.6% in August. This was the tenth monthly fall in the last five years: a period when prices in the UK have more than doubled.
- House prices have increased by 1.8% during the past three months. This is significantly below the 6.5% rise recorded in the preceding three months. It is becoming increasingly clear that the five rises in interest rates since November 2003 are acting as a brake on house price growth.
- A number of other key market indicators have shown a softening in housing market activity over the past few months. These indicators, however, show that activity levels remain at historically high levels and are consistent with a moderating housing market.
- The market remains well underpinned by a strong economic background, historically low debt-servicing costs and supply shortages. The labour market is performing well with the claimant count unemployment rate at a 25 year low of 2.7% and employment growing by 443,000 in the past two years. We continue to expect house price inflation to slow gradually over the remainder of 2004 and into next year as higher interest rates and the increasing difficulties faced by potential first-time buyers in entering the market curb housing demand.
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