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

Halifax House Prices (Feb.)

UK Housing Market Data Response
Written by Andrew Wishart

The easing off in Halifax house price inflation in February marks a contrast with Nationwide’s more upbeat figure. Nonetheless, house prices appeared to be holding onto their 2020 gains even when buyers could no longer expect to benefit from the stamp duty holiday. And we think that the raft of policy support announced by the Chancellor this week will ensure that house prices don’t fall this year.

Cooling but resilient

  • The easing off in Halifax house price inflation in February marks a contrast with Nationwide’s more upbeat figure. Nonetheless, house prices appeared to be holding onto their 2020 gains even when buyers could no longer expect to benefit from the stamp duty holiday. And we think that the raft of policy support announced by the Chancellor this week will ensure that house prices don’t fall this year.
  • The 0.1% m/m drop in the Halifax house price index in February marked a second consecutive monthly decline and caused annual house price inflation to ease from 5.4% to 5.2%. (Consensus: 0.0% m/m, 4.6% y/y.) That was substantially weaker than the +0.7% m/m gain recorded by Nationwide.
  • Taking all the house price indices for February into account, there were clear signs that the housing market was cooling at the very start of the year. (See Chart 1.) That’s unsurprising given that prolonged conveyancing times made it very unlikely sales agreed in January or February would exchange in time to benefit from the original stamp duty holiday.
  • But it now seems unlikely that the loss in house price momentum will be severe as we previously forecast. Admittedly Rightmove asking price inflation has fallen back quite sharply, but that was partly due to the base effect of a sharp rise in asking prices in January 2020. Google searches for property portals and buyer enquiries through Rightmove rebounded to above pre-pandemic norms in February. (See here.)
  • So buyer demand appeared solid before the policy package announced by the Chancellor at the Budget, which all but ensured transaction volumes and house prices will be sustained through most of this year. (See here.) Coming on top of evidence that the ongoing boost from strong pandemic saving and an increased desire to move because of home working were larger than we initially realised, that has led us to revise our forecast that house prices will dip this year.

Chart 1: House Price Indices (% y/y)

Sources: Nationwide, Halifax, Capital Economics

Table 1: Halifax House Price Index

2020

2021

Seasonally adjusted

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

House prices (£000s)

240.5

239.8

238.3

237.9

237.8

241.8

245.9

249.7

250.4

252.9

252.8

251.8

251.7

%m/m

0.1

0.2

-0.6

-0.2

0.0

1.7

1.7

1.5

0.3

1.0

0.0

-0.4

-0.1

%3m/3m

2.4

1.6

0.6

-0.2

-0.6

0.0

1.3

3.3

4.0

3.8

2.5

1.6

0.5

% y/y

2.8

3.0

2.7

2.6

2.5

3.8

5.2

7.3

7.5

7.6

6.0

5.4

5.2

Source: Halifax


Andrew Wishart, Property Economist, +44 (0)7427 682411, andrew.wishart@capitaleconomics.com