HALP Halifax 9.375bd

RNS Number:3440W
HBOS PLC
10 May 2007



                             Halifax House Price Index

         National Index                                    April 2007




                     All Houses, All Buyers Index (1983=100)

Index (seasonally adjusted) 636.8     Monthly Change 1.1%    Annual Change 10.9%

             Standardised Average Price (seasonally adjusted)  #196,745




                                       Key Points



*         House prices rose by 1.1% in April, the smallest monthly rise so far
this year and the second lowest since July 2006.

*         The annual rate of house price growth fell slightly to 10.9% from
11.1% in March.

*         The number of mortgage approvals to fund house purchase fell modestly
from a seasonally adjusted 118,000 in February to 113,000 in March, the lowest
level since April 2006.  Buyer interest in properties declined for the fourth
consecutive month in March.

*         Good economic and employment conditions underpin housing demand. The
UK economy has now recorded 59 consecutive quarters of growth and is on track to
breach the 60 mark in the current quarter.

*         Healthy, albeit easing, demand together with a shortage of both new
and secondhand homes for sale continues to drive house prices up.  The stock of
unsold property on estate agents' books fell in March; making market conditions
the tightest for nearly three years.

*         Negative real earnings growth, together with the effects of the
interest rates rises since last summer, is exerting pressure on householders'
finances. These pressures, exacerbated by a probable interest rate rise in the
near-term, are expected to further constrain housing demand over the coming
months.  As a result, house price inflation is likely to ease.









Commenting, Martin Ellis, chief economist, said:



"House prices increased by 1.1% in April; the smallest monthly increase so far
this year and the second lowest since July 2006.  There is accumulating evidence
of a slight easing of conditions in the housing market with further signs of
moderation in both demand and activity in the past month.



Demand remains healthy which, together with tight supply, continues to push up
prices. 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 slowdown in house price
inflation over the coming months."



Signs that housing market activity is easing ......

The number of mortgage approvals to fund house purchase fell from a seasonally
adjusted 118,000 in February to 113,000 in March, the lowest level since April
2006.  Overall, approvals in the first three months of 2007 were 5% lower than
in the final quarter of 2006 (Source: Bank of England).



Buyer interest in properties declined for the fourth consecutive month,
according to the latest RICS monthly survey.







Good economic and employment conditions underpin healthy housing
demand ......

Gross domestic product (GDP) is estimated to have continued to grow at above its
long-term average pace in the first quarter of 2007 with a 0.7% increase
(Source: ONS).  The UK economy has now recorded 59 consecutive quarters of
growth, extending the longest unbroken stretch on record, and on track to breach
the 60 mark in the current quarter.



The number of people in employment has increased by 147,000 over the past year,
although there was a 47,000 decline in the three months to February compared
with the previous quarter.



Housing supply is low .......

The stock of unsold property on estate agents' books fell in March, pushing up
the ratio of sales to available property stock to its highest since mid 2004,
indicating that market conditions are the tightest for nearly three years
(Source: RICS).  Healthy, albeit easing, demand together with a shortage of both
new and secondhand homes for sale continues to drive house prices up.



But negative real earnings growth and higher interest rates to cause house price
inflation to moderate

Annual headline retail price inflation, at 4.8%, is in excess of annual average
earnings growth, at 4.6%, according to the latest figures (Source: ONS).  This
negative real earnings growth, together with the effects of the interest rates
rises since last summer, is exerting pressure on householders' finances. In
addition to the rise in variable rate mortgages since last August, fixed rate
mortgages have also risen, reaching an average rate of 5.56% in March 2007; the
highest since August 2001 (Source: Bank of England).  These pressures,
exacerbated by a probable interest rate rise in the near-term, are expected to
further constrain housing demand over the coming months.  As a result, house
price inflation is likely to ease.



NOTE: The 10.9% 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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