Worsening affordability caused by a sustained period of higher-than-earnings house price growth, should curb demand and result in a slowdown in house price growth later this year.
That is the warning from the Halifax, which has released its latest figures - for May - showing that in the three months to the end of last month average house prices across the UK were a modest 1.4 per cent higher than in the previous quarter.
“The annual rate of growth was unchanged at 9.2 per cent - the lowest since last autumn” says Martin Ellis, Halifax’s housing economist.
“Low interest rates, increasing employment and rising real earnings, continue to support housing demand. The strength of demand, combined with very low supply, is causing house prices to rise at a brisk pace in quarterly and annual terms” he says, but then goes on to warn that this will not last through the second half of 2016.
Former RICS chairman and north London estate agent Jeremy Leaf says it is encouraging for the longer-term health of the market that prices haven’t dropped substantially following the introduction of the stamp duty surcharge on April 1.
“But it’s clear that house prices are being underpinned by a shortage of stock and substantial reduction in transaction volumes” he says.
"However, with the EU referendum on the near horizon it’s probably a little early to make too broad a judgement on these figures” says, Leaf, adding: “Who is going to decide to buy a property if they don’t know whether they are going to get that pay rise or even be laid off, depending on the outcome of the referendum?'
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