House prices up 6.4pc despite slowdown

Sarah Davidson

July 28, 2014

Average house prices in England and Wales stand at £172,011, still well below the November 2007 peak of £181,466.

The London market has continued to move the fastest, with prices increasing by 16.4% in the last 12 months, while the North East has seen growth of just 0.8%.

David Brown, commercial director of LSL Property Services, said: “Confidence is all about stability – and the property market is delivering that. We are seeing a shift from a period of catch-up to one of stable price growth. And across the country, prices are now rising more uniformly too.

“All of this will reassure buyers and sellers – and encourage more investment in new homes.”

On a month-on-month basis prices grew most sharply in the West Midlands at 1.9%, while Yorkshire and the Humber saw the greatest monthly fall of 1.3%.

Brian Murphy, head of lending at the Mortgage Advice Bureau, felt buyers should continue to take advantage of the market despite the apparent slowdown.

He said: “As house prices continue to rise and an increase in the base rate looms on the horizon, it appears many potential buyers are losing their nerve, with recent research showing only 5% of people believe the coming year is a good time to buy a house.

“However, today’s Land Registry data suggests consumers should think twice before shying away from the property market, as average house prices stayed stable in June and remain £10,000 lower than their peak in November 2007, suggesting homes are more affordable across much of the country than some might think.

“While interest rates are bound to rise in the future, the Bank of England has repeatedly confirmed its commitment to making very gradual and cautious increases to the base rate.

“Households are being given plenty of warning to consider how to absorb the impact on monthly mortgage repayments and the fact that repossession sales have significantly dropped is a sign of progress in the right direction.”

Jeremy Duncombe, director of Legal and General Mortgage Club, felt consumers should remain cautious however.

He said: “According to our latest Mortgage Mood survey 68% of homeowners believe that rates will rise within a year, and most don’t believe that they will increase by more than 1%.

“The historically low rates seen right now have also distorted people’s perception of what a ‘normal’ mortgage rate should be, with a quarter of homeowners believing that it should be between 1.1% and 3%.

“To ensure that the housing market continues to grow in a sustainable way, the industry needs to work together to raise awareness among homeowners of the effects a rate rise might have on their repayments and help them to plan their finances accordingly.”

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