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Finance

Halifax ups house price growth estimate

19/07/2007

Halifax has revised its forecast for house price growth in 2007, with the mortgage lender now expecting property prices to grow by six per cent over the year.

The home loan provider, which publishes the UK's longest-running monthly house price index, had previously predicted an increase of four per cent.

However it stressed that a subsequent rise of six per cent for 2007 would still be one of the smallest increases in property prices recorded since 1995.

The predicted rise is also below long-term average annual growth of eight per cent, which has been recorded since 1983.

Halifax's decision to raise its estimate of property price inflation comes in the wake of separate data today, suggesting that mortgage lending reached a new high last month despite the recent interest rate rises introduced by the Bank of England.

The gross value of home loans reached £34.2 billion in June, according to the Council of Mortgage Lenders.

But Halifax has warned that rate rises are beginning to have an impact on the housing market, with the growth in property prices expected to slow during the latter part of the year as a result of increasing pressure on householders' finances.

"The increase in mortgage rates since last summer is having an effect on housing affordability and will increasingly bite over the second half of the year," warned the mortgage lender.

"Negative real earnings growth so far this year and rising food prices will also reduce the income households have available for housing," the Halifax added.



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