Halifax House Prices (Aug.) - Capital Economics
UK Housing

Halifax House Prices (Aug.)

UK Housing Market Data Response
Written by Gabriella Dickens

While the revamped Halifax House Price Index pointed to slightly faster annual house price growth in August, it is a far cry from the unusually strong rates shown by the old series. Nonetheless, with ongoing Brexit uncertainty, we expect house prices to remain sluggish this year.

Renewed Halifax Index broadly in line with other measures

  • While the revamped Halifax House Price Index pointed to slightly faster annual house price growth in August, it is a far cry from the unusually strong rates shown by the old series. Nonetheless, with ongoing Brexit uncertainty, we expect house prices to remain sluggish this year.
  • According to the updated Halifax index, house prices rose by 0.3% m/m in August, slightly slower than the 0.4% m/m rise in July. But the headline rate of annual house price growth came in at 1.8% in August – up from the 1.5% seen last month.
  • While the Halifax Index continued to paint a more upbeat picture of house price growth than the Nationwide measure, which pointed to house price growth of 0.6% y/y in August, improvements to the index’s methodology have brought the Halifax measure of house prices roughly back in line with the other main indices. (See Chart 1.) Indeed, at 1.8%, the latest result is a far cry from the previous headline rate of annual house price growth of 4.1% in the three months to July.
  • Admittedly, the Halifax measure chimes with July’s RICS survey, which showed a second monthly increase in new buyer enquiries. But we don’t think this is the start of a recovery in the market. Indeed, with ongoing Brexit uncertainty and economic growth set to stay fairly subdued, house price growth is likely to remain sluggish over the rest of the year. We have pencilled in a 1% increase in house prices in 2019.
  • Beyond that, we expect house price growth of less than 2% y/y out to 2021 regardless of the Brexit outcome. If there is a Brexit deal, we don’t expect much of an impact of the housing market as rising interest rates would offset any boost to sentiment. And if there was a no deal Brexit, we think that transactions rather than prices would be hit, as the uncertainty and economic disruption is enough to delay transactions, but not enough to force down prices.

Chart 1: Alternative Measures of House Prices

Sources: Nationwide, Halifax, Rightmove

Halifax House Prices – Key figures

2018

2019

Seasonally adjusted

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

House prices (£000s)

229.3

229.7

230.1

229.8

229.8

230.7

234.2

233.5

232.1

231.8

231.9

232.9

233.5

%m/m

0.0

0.2

0.2

-0.1

0.0

0.4

1.5

-0.3

-0.6

-0.1

0.0

0.4

0.3

%3m/3m

0.9

0.6

0.4

0.3

0.2

0.2

0.8

1.3

1.4

0.4

-0.4

-0.5

0.1

%y/y

2.7

2.0

2.7

2.6

2.0

1.9

2.5

2.8

2.6

1.7

1.2

1.5

1.8

Source: Halifax


Gabriella Dickens, Assistant Economist, 020 3974 7421, gabriella.dickens@capitaleconomics.com