Halifax 9.375bd Regulatory News (HALP)

10 May 2007 08:00

HBOS PLC10 May 2007 Halifax House Price Index National Index April 2007 All Houses, All Buyers Index (1983=100) Index (seasonally adjusted) 636.8 Monthly Change 1.1% Annual Change 10.9% Standardised Average Price (seasonally adjusted) £196,745 Key Points • House prices rose by 1.1% in April, the smallest monthly rise so farthis year and the second lowest since July 2006. • The annual rate of house price growth fell slightly to 10.9% from11.1% in March. • The number of mortgage approvals to fund house purchase fell modestlyfrom a seasonally adjusted 118,000 in February to 113,000 in March, the lowestlevel since April 2006. Buyer interest in properties declined for the fourthconsecutive month in March. • Good economic and employment conditions underpin housing demand. TheUK economy has now recorded 59 consecutive quarters of growth and is on track tobreach the 60 mark in the current quarter. • Healthy, albeit easing, demand together with a shortage of both newand secondhand homes for sale continues to drive house prices up. The stock ofunsold property on estate agents' books fell in March; making market conditionsthe tightest for nearly three years. • Negative real earnings growth, together with the effects of theinterest rates rises since last summer, is exerting pressure on householders'finances. These pressures, exacerbated by a probable interest rate rise in thenear-term, are expected to further constrain housing demand over the comingmonths. As a result, house price inflation is likely to ease. Commenting, Martin Ellis, chief economist, said: "House prices increased by 1.1% in April; the smallest monthly increase so farthis year and the second lowest since July 2006. There is accumulating evidenceof a slight easing of conditions in the housing market with further signs ofmoderation in both demand and activity in the past month. Demand remains healthy which, together with tight supply, continues to push upprices. Good economic growth and a strong labour market will continue to supporthealthy housing demand. Negative real earnings growth and the increase ininterest rates since last August, however, are expected to exert increasingpressure on householders' finances, resulting in slowdown in house priceinflation over the coming months." Signs that housing market activity is easing ...... The number of mortgage approvals to fund house purchase fell from a seasonallyadjusted 118,000 in February to 113,000 in March, the lowest level since April2006. Overall, approvals in the first three months of 2007 were 5% lower thanin the final quarter of 2006 (Source: Bank of England). Buyer interest in properties declined for the fourth consecutive month,according to the latest RICS monthly survey. Good economic and employment conditions underpin healthy housingdemand ...... Gross domestic product (GDP) is estimated to have continued to grow at above itslong-term average pace in the first quarter of 2007 with a 0.7% increase(Source: ONS). The UK economy has now recorded 59 consecutive quarters ofgrowth, extending the longest unbroken stretch on record, and on track to breachthe 60 mark in the current quarter. The number of people in employment has increased by 147,000 over the past year,although there was a 47,000 decline in the three months to February comparedwith the previous quarter. Housing supply is low ....... The stock of unsold property on estate agents' books fell in March, pushing upthe ratio of sales to available property stock to its highest since mid 2004,indicating that market conditions are the tightest for nearly three years(Source: RICS). Healthy, albeit easing, demand together with a shortage of bothnew and secondhand homes for sale continues to drive house prices up. But negative real earnings growth and higher interest rates to cause house priceinflation to moderate Annual headline retail price inflation, at 4.8%, is in excess of annual averageearnings growth, at 4.6%, according to the latest figures (Source: ONS). Thisnegative real earnings growth, together with the effects of the interest ratesrises since last summer, is exerting pressure on householders' finances. Inaddition to the rise in variable rate mortgages since last August, fixed ratemortgages have also risen, reaching an average rate of 5.56% in March 2007; thehighest since August 2001 (Source: Bank of England). These pressures,exacerbated by a probable interest rate rise in the near-term, are expected tofurther constrain housing demand over the coming months. As a result, houseprice inflation is likely to ease. NOTE: The 10.9% number is the quarterly year-on-year figure. This figureprovides a much better picture of underlying trends compared to a monthlyyear-on-year number as it smoothes out any short-term fluctuations. The Halifax House Price Index is prepared from information that we believe iscollated with care, but we do not make any statement as to its accuracy orcompleteness. We reserve the right to vary our methodology and to edit ordiscontinue the indices at any time for regulatory or other reasons. Personsseeking to place reliance on the indices for their own or third party commercialpurposes do so at their own risk. This information is provided by RNS The company news service from the London Stock Exchange