House prices "lack genuine direction"
House prices fell by 0.5% between August and September and are "lacking genuine direction", according to the Halifax.
The average home in the UK is now worth £161,132, down 2.3% from a year ago.
For the past year, there has been a mixed pattern of monthly changes in prices and a great deal of disparity between the different house price indices. But one thing they agree on is that prices have remained broadly stable overall.
Lack of demand
Part of the reason for sluggish movement in the housing market is a lack of demand for new housing. Halifax blames this on uncertainty about economic and personal financial circumstances together with pressure on householders' finances, higher inflation and a rise in taxes. But despite these pressures, historically low interest rates and a slight rise in employment over the past year has resulted in broad stability in prices and activity.
House prices in the third quarter (July to September) were slightly higher than the previous quarter – there was a 0.1% increase, marking the first quarterly rise since the beginning of 2010.
Looking forward, Halifax says it expects little change in prices and activity during the rest of the year and Nationwide echoed this sentiment last week when it said prices were "treading water".
Martin Ellis, housing economist for Halifax, says: "The more volatile monthly figures showed a 0.5% decline in prices in September. This continued the mixed monthly picture experienced so far this year with four rises, four falls and one no change since January. This mixed pattern is consistent with a market where prices are lacking genuine direction."
Alex King, spokesperson for mortgage brokers SPF Private Clients, says: "Once again, the market continues to bounce around with no discernible direction. For short-term prices to be said to be trending in one direction or another, you need a certain critical mass of data that simply isn't there at present.
"Low interest rates, cheap mortgage finance and, in many areas, a shortage of homes are propping up prices while weak consumer confidence and reduced disposable incomes are causing people to sit on their hands. The result is a cancelling out and a property market that is essentially in limbo – unsure of its direction."
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).