House prices show signs of recovery

Mortgage lenders Halifax and Nationwide both report some growth in average house prices in the UK since the same time last year. This is confirmed by the Land Registry’s house price index for February.

The latest figures from the Halifax show prices in the first three months of 2013 were 1. 2% higher than for the last three months of 2012, the fourth successive increase in this measure. They also report a 0. 2% rise in March, following 0. 5% growth in February.  

The Land Registry’s index, which is based on completed property purchases, indicates a rise of 1% over last year. The Registry’s figures are based on purchases reported to the end of February, while the Halifax index is derived from their own mortgage data, which they consider provides a more accurate view of current market conditions.

These figures are of course based on property prices across the country. So while there have been rises in some parts of the country, prices in other areas still continue to struggle.  

Prices remain high in London; Wales and Northern England also see an increase

The Nationwide Building Society’s house price index reveals that 7 out of 13 UK regions saw annual price rises in the first quarter of 2013, with prices at a new record high in London. The average price of property in the capital is £370, 819 in comparison with the average for England and Wales of £162, 606, according to the Land Registry.

Outside the capital, Wales and Northern England all showed average home prices growing by over 3% during February, while the South-West and the West Midlands saw a slight fall in the same period.

Signs of increased activity in the market

One indicator of the strength of the property market is the number of transactions being completed. Here it seems difficult to get an accurate picture of the current level of activity. The Land Registry figures show that from September to December last year there was an average of 56, 886 sales per month, as against 61, 392 for the same period in 2011.

There are some signs of increased activity over the last few months. Home sales increased by 5% between January and February on a seasonally adjusted basis, according to the latest industry figures. Sales in February, at 85, 710, were 10% higher than in February 2012 (Source: HMRC).  

However the number of mortgage approvals for house purchases – a leading indicator of completed house sales – fell by 5% between January and February to its lowest level since September 2012 (Source: Bank of England, seasonally-adjusted figures).

It is too soon to say whether the Help to Buy package announced in last month’s budget will help boost the housing market. The mortgage guarantee part of the scheme will not come into play until next year, but the availability of equity loans now to help buyers with low deposits should help increase the sales of new homes over the next few months.

However it is unlikely that there will be any substantial growth in house prices for some time to come. Martin Ellis, head of housing economics at Lloyds Banking Group, says “Weak income growth and continuing below-trend economic growth are likely to remain significant constraints on housing demand during the remainder of this year. Overall, we expect to see a modest increase in UK house prices during 2013. ”


by admin
Monday 14th of September 2015 09:34:29 PM