House prices rise as cash buyers boost demand
Richard Sexton, director of e.surv chartered surveyors, said: “The housing market demonstrated its resilience in August, as both house prices and sales activity rose, highlighting the underlying demand from buyers.
“In place of the usual seasonal slowdown, transactions bounced back by 2.5% in August.
“However, rather than signaling a radical shift in the housing market, the improvement reflects a mini-resurgence following more sluggish buyer activity earlier in the summer, affected by a combination of the Jubilee bank holiday and historically heavy rainfall. In reality, obtaining a big enough mortgage remains a hurdle for thousands of first-time buyers, despite the government’s NewBuy scheme.
“While a lack of stock continues to support house prices, it is cash buyers and the equity rich that are providing the impetus for short-term improvements in the market.”
But Sexton added: “However, it’s not a homogenous picture across England and Wales. With wealthier investors playing a pivotal role in the national housing market, there is an increasing divide between the North and South.
“London, the South East and the South West – where there are greater concentrations of wealthier buyers – are the key driving forces at present, and are seeing the fastest rate of annual price growth. Even within cities, local markets are running at completely different paces. In London, for instance, Kensington & Chelsea is seeing five times the annual price growth of a less affluent borough such as Lewisham.
“In light of the difficult economic backdrop, it’s encouraging to see the government place the housing sector in the limelight, extending its shared equity scheme First Buy and supporting new house building. However, to reignite the recovery in the national housing market, these measures need to be supported by a concerted effort from lenders to help unlock the lower tiers, supplying appropriate credit to those first-time buyers who need it most.”