HALP Halifax 9.375bd

RNS Number:2954D
HBOS PLC
05 September 2007



                                   Halifax House Price Index

                National Index                                   August 2007




                      All Houses, All Buyers Index (1983=100)

Index (seasonally adjusted) 646.6     Monthly Change 0.4%    Annual Change 11.4%

           Standardised Average Price (seasonally adjusted)  #199,770




Key Points

*         House prices increased by 0.4% in August. This is the third month in
the last four that house prices have grown by less than 0.5%, confirming that
house price inflation is slowing.

*         The three monthly increase in house prices - a good indicator of the
underlying trend - has fallen from 4.5% in March to 1.6% in August.

*         The annual rate edged higher to 11.4% in August from 11.2% in July. 
The annual rate should decline over the coming months as the strong monthly
house price gains last summer and autumn drop out of the year-on-year
comparisons.

*         Mortgage approvals to fund house purchase in the three months to July
were 9% lower than during the recent three month peak during September to
November 2006. The level of new buyer interest in purchasing a house fell for
the eighth successive month in July, marking increasing caution amongst
potential buyers.

*         A healthy economy and strong labour market continue to underpin
housing demand.  Gross domestic product (GDP) increased by 0.8% between Q1 and
Q2, above its long-term average pace (0.7%).  Employment continued to rise
against the background of healthy economic growth in the three months to June
with the total number 93,000 higher than in the previous quarter.

*         House price inflation is expected to ease over the rest of 2007.  The
increase in mortgage rates since last summer is having an effect on housing
affordability and will bite further during the coming months.  Negative real
earnings growth so far this year - average earnings increased by 3.3% over the
year to June 2007 against a 4.4% rise in the Retail Price Index - and rising
food prices will also reduce the income households have available for housing.









Commenting, Martin Ellis, Chief Economist, said:



"House prices increased by 0.4 per cent in August.  This is the third month in
the last four that house prices have risen by less than 0.5 per cent.  Whilst
the market remains robust, this provides further evidence that house price
inflation has slowed since the beginning of the year.



The downward trend in house price growth is expected to continue over the
remainder of 2007 as the five interest rate rises since last summer have an
increasing impact on household spending and housing demand.   Sound economic
fundamentals, high levels of employment and a shortage in the number of
properties available for sale will, however, continue to support house prices."



House price growth is slowing.....

The three monthly increase in house prices - a good indicator of the underlying
trend - has slowed sharply over the past few months.  Prices rose by 1.6%
between June and August compared with a 4.5% in the three months to March.



.....and housing market activity also continues to ease

Mortgage approvals to fund house purchase held steady at a seasonally adjusted
115,000 in July.  Nonetheless, approvals in the three months to July were 9%
lower than during the recent three month peak during September to November 2006.
(Source: Bank of England)



The level of new buyer interest in purchasing a house fell for the eighth
successive month in July, indicating that potential buyers have become more
cautious.  Completed property sales in July were 10% lower than a year ago.
(Source: RICS)



Interest rate effect to bite increasingly in the coming months ......

The increase in mortgage rates since last summer is having an effect on housing
affordability and will bite further during the coming months.  Negative real
earnings growth in the first six months of this year and rising food prices is
also reducing the income households have available for housing. Average earnings
increased by 3.3% over the year to June 2007; 1.1 percentage points lower than
the increase in the Retail Price Index over the same period (4.4%).



Economic fundamentals are sound

Strong economic fundamentals continue to support the housing market. Latest
official figures confirm that gross domestic product (GDP) increased by 0.8%
between Q1 and Q2, above its long-term average pace (0.7%).



Employment continued to rise against the background of healthy economic growth
in the three months to June with the total number 93,000 higher than in the
previous quarter. The total number in employment stands at a record 29.1 million
(Source: ONS)



A sound economic background, together with an ongoing shortage of both new
housebuilding and secondhand properties for sale, should continue to support
house prices.





NOTE: The 11.4% number is the quarterly year-on-year figure.  This figure
provides a much better picture of underlying trends compared to a monthly
year-on-year number as it smoothes out any short-term fluctuations.



The Halifax House Price Index is prepared from information that we believe is
collated with care, but we do not make any statement as to its accuracy or
completeness.  We reserve the right to vary our methodology and to edit or
discontinue the indices at any time for regulatory or other reasons.  Persons
seeking to place reliance on the indices for their own or third party commercial
purposes do so at their own risk.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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