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House prices rise 0.3% in February

House prices rose by 0.3% month-on-month in February, down on January – but trend still strong.

Richard Reed

London signboards imageHouse prices rose by 0.3% month-on-month in February, according to the latest figures from the Halifax – slightly down on the 1.5% rise in January.

The year-on-year increase also slowed to 2.8% in February from 4.1% the previous month.

The Halifax figures compare with a slightly more conservative estimate from Nationwide, which put annual house price inflation at a 19-month high of 2.3% in February.

The underlying trend remains strong, however, with a gain of 2.9% over the three months from November 2019.

Confidence has soared since the decisive general election result, ending months of uncertainty over Brexit.

The Halifax figures follow data from the Bank of England showing mortgage approvals for house purchases rose to 70,888 in January, the highest level in four years.

The data relates to the period before the dramatic increase in coronavirus cases.

Business analyst EY says it now looks likely that the COVID-19 outbreak will have a dampening effect on the economy and could also affect consumer confidence.

As a result, EY has revised its house-price forecast downwards from a 3% rise over the course of 2020 to 2.5%.

“We had been expecting house prices to rise 3% over 2020 following the marked pick-up in activity at the start of the year. However, it looks highly likely that the coronavirus outbreak will have some dampening effect as it impacts on the economy and consumer confidence,” said Howard Archer, Chief Economic Advisor to the EY ITEM Club.

“Housing market activity – and possibly to a lesser extent – prices  could be given a modest lift if the government introduces specific measures aimed at boosting the sector in the Budget.”

Mr Archer said the shortage of properties for sale was likely to keep prices buoyant, although the latest RICS survey showed new instructions rose sharply in January for the second month in a row.

“The economy now looks set for a pretty challenging year,” he added.

March 9, 2020

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