House prices rose by 2.7% in August, the highest monthly increase since May 2014, according to the Halifax.
This surprise growth contributed to a 3% rise over three months and annual house price inflation of 9%. Halifax also reports that the average property price is now £204,674.
Housing Economist at the Halifax, Martin Ellis, says: “The shortage of second-hand properties for sale on the market is resulting in upward pressure on house prices.
Surprise Rise in House Prices, Says Halifax
“At the same time, economic recovery, real earnings growth and very low mortgage rates are supporting housing demand.”1
The data for August has surprised some analysts, causing the second group of leading economists in a week to change their house price predictions for 2015 onwards.
Chief Economist at IHS Global Insight, Howard Archer, called Halifax’s August figure a “real eye opener”, especially when compared to Nationwide’s statistics, which recently indicated that house prices increased by a smaller 0.3% in August.
Contrasting to the Halifax, Nationwide’s data indicates that the annual rate of house price growth was the weakest for two years in August.
IHS Global Insight has now revised its forecast on house price growth for 2015, raising it from 6% to 7%.
Archer explains: “Latest data and survey evidence largely indicate that housing market activity is on the up, and we suspect it will be supported over the coming months by largely helpful fundamentals, notably including stronger earnings growth, high employment, elevated consumer confidence and still very low mortgage interest rates.”1
The Royal Institution of Chartered Surveyors (RICS) also revealed that it has changed its UK house prices prediction, expecting prices at the end of the year to be 6% higher than at the start. Entering 2015, RICS forecast a 3% increase.
Chief Economist at RICS, Simon Rubinsohn, says: “House price inflation has now quickened in each of the last seven months following a sustained period of easing towards the latter half of 2014.
“And there is good reason for this trend to be sustained into 2016.”1