Halifax reports UK housing market remains strong

The UK housing market is strong with house prices increasing, the Halifax has claimed in its latest market survey.

The bank found that prices rose by 1.3% last month, and over the past three months house prices have risen by 3.4% – in line with the 3.4% increase during the preceding quarter.

The report also suggested that there was renewed activity in London's mainstream housing market with Halifax Estate Agents reporting an increase in the number of properties coming onto the London and South East mainstream market.

There continues to be a chronic shortage of houses particularly in the South East, the report claims. In 2002, a total of just over 170,000 new homes were built in Britain, slightly above the 2001 figure of 162,000, which was the lowest number of new homes built in any year since 1949.

If current levels of house-building are not increased in London and the South East, and the decline established over the past 15 years reversed, Halifax calculates that there will be a cumulative shortage of dwellings in those regions of around 500,000 by 2021.

Martin Ellis, Chief Economist, said: "The housing market is strong. With mortgage rates at a 50-year low, benign employment prospects and affordability levels well below the long term average, the housing market continues to be underpinned by strong fundamentals."

Bank of England figures show that total lending to individuals grew to record levels during June. Lending increased by £10 billion in June, taking consumer debt to the highest level since records began in 1993.

Although personal debt is at an all-time high, the impact of 50-year low interest rates has meant that debt is very affordable, the survey found.

Across the UK, the average new borrower is spending 14% of average gross earnings on mortgage payments, well below the average of 22% since 1983. According to the Council of Mortgage Lenders, the average loan to value (LTV) is currently 65% - down slightly from 66% in 2002.

(GMcG)