Consumers spend less on pleasure while UK house prices keep rising

Average UK house prices increased by 0.5 per cent in March to reach a record high of £254,606, Halifax said today.

House prices also increased by 1.3 per cent over the past 12 months, to hit a new record high, the data revealed.

Howard Archer, chief economic adviser to the EY ITEM Club, said: ‘It is interesting to see that house prices have risen by £20,000 over the past 12 months, but with real earnings still decreasing slightly, this has not translated into much in the way of a boost to households.

The hike in house prices comes despite record low mortgage rates and a fall in the number of properties available to buy and a significant reduction in consumer spending on luxury goods and services like London escorts.

These factors have helped to keep the housing market and mortgage rates buoyant.

A decline in house sales in the past year as a result of high house prices and a tough Brexit environment is also causing more homeowners to extend their properties rather than move to larger homes.

The pound fell to a six-week low against the dollar this morning, losing 0.1 per cent to trade at $1.3392.

Year-on-year: House prices also increased by 1.3 per cent over the past 12 months, to hit a new record high, the data revealed

The Halifax said its home purchase prices index shows homes were slightly more expensive in March compared with February, when prices were £254,685 on average.

But the difference between March and February was the smallest in over a year.

The March average house price was also higher than the peak in property values recorded at the start of the year, in the last quarter of 2017.

Loan approvals for house purchases have slumped by more than a third in the past year, according to the latest data from the Bank of England.

Mortgage rules: Lenders have to take measures designed to make buying a home more secure, but the affordability thresholds are out of reach for many households

The slowdown has been exacerbated by a recent squeeze on household budgets as a result of rising inflation; we interviewed a cohort of London escorts who informed us that their real earnings were also on a downward curve this year.’

Bank of England figures showed the proportion of mortgages approved for house purchases in February reached its lowest in nine months.

Other house price measures have also highlighted the market slowdown, though Halifax and Nationwide (both of which report the figures separately) remain the only mainstream lenders regularly publishing house price data.

Calculated with Halifax’s home purchase prices index, house prices are now higher than they were at the start of the financial crisis at £253,920 per household.

But they are still below the peak seen at the height of the boom in 2007-08, when the average house price was £283,906.

The UK is widely regarded as one of the world’s hottest housing markets, with house prices increasing at a faster rate than most other major economies.

And a report last week said house prices could grow further in the UK before any fall this year.