The reliability of Halifax’s house price index has once again been called into question after it found that property prices rose 1.1pc month-on-month in April, while annual prices jumped 5pc – well above the general consensus and “implausibly strong”, economists said.
Rightmove’s measure of online asking prices fell by 0.1pc year-on-year in April, while Nationwide’s annual measure climbed by just 0.9pc.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the surge in house prices reported by Halifax cannot be reconciled with any other evidence from the housing market. He said the growth rate was “still implausibly strong”.
But the bank defended its measure by saying the sharp 5pc rise in April’s annual change comes against the backdrop of a particularly low growth rate over the corresponding period in 2018, affecting year-on-year comparisons.
“This also factors in a notably high growth figure recorded in February this year, driven by a higher volume of London sales and more expensive new build properties,” managing director Russell Galley said.
The average UK house price now stands at £236,619, according to the bank.
Halifax’s house price index has previously sparked doubts over its reliability after reporting a 5.9pc increase in prices month-on-month in March – significantly higher than the growth rate recorded by other indices and the largest single monthly increase ever recorded on the bank’s index.
At the time, Mr Tombs said: “We have little confidence in Halifax’s index as a reliable indicator of the housing market. Its extreme volatility undermines its validity.”
Halifax’s house price index is based on homes bought with mortgages, excluding council house sales, shared ownership and help-to-buy schemes, while rival Nationwide’s is based on owner-occupier house purchase transactions involving a mortgage. Buy-to-let and cash deals are not counted.
Lucy Pendleton, of estate agents James Pendleton, said the “blistering volatility of this index has returned as the Halifax house price weather vane spins itself into a frenzy once more”.
She said: “One explanation for ricocheting growth figures like this is persistently low stock levels. In sought after areas, this can lead to demand being supercharged one minute and gone the next, with price rises coming in waves as brief competitions for limited numbers of homes come and go.
“Even so, the Halifax index’s behaviour so far in 2019 has been unusual to say the least.”
Halifax has been among the most bullish about the UK property market post-Brexit, with expectations of 2pc to 4pc growth nationally by the end of this year under an orderly Brexit.
The Royal Institution of Chartered Surveyors (Rics) has predicted that national house price growth will come to a “standstill” this year, but a supply shortage “will negate outright falls”, while estate agent Jackson-Stops is expecting an average increase of 1pc in property values in 2019.
House prices were rising by about 5pc a year at the time of the Brexit referendum in 2016.