House prices rise in April

House prices rose by 1.1% in April, the smallest increase so far this year, and the second smallest since July 2006, bringing annual house price growth to 10.95%, down from 11.% in March, says the Halifax today. Martin Ellis, Chief Economist with the Halifax explained that all the signs point to an easing of the market: 'Demand remains healthy which, together with tight supply, continues to push up prices,' he said. 'Good economic growth and a strong labour market will continue to support healthy housing demand. Negative real earnings growth and the increase in interest rates since last August, however, are expected to exert increasing pressure on householders' finances, resulting in a slowdown in house price inflation over the coming months.' The report also notes that the number of mortgage approvals given also fell in March, as buyer interest declined for the fourth consecutive month according to the Royal Institute of Chartered Surveyors. Seema Shah from Capital Economics agrees, saying the underlying trend is of the market slowly cooling. 'We would expect house price pressures to show further signs of easing in coming months. However, with market conditions continuing to tighten thanks to low supply, we are unlikely to see falling house prices. But further rate rises will only put further strain on already poor affordability, reinforcing the recent signs of weaker activity. As such, our forecast of much weaker house price inflation by end-2007 remains on track.'