House prices up by 8.5pc
Annually prices were 8.5% higher in the three months to April than in the same three months last year.
However, prices fell marginally during the month representing a second successive monthly decline.
Commenting, Stephen Noakes, mortgages director, said: “Although mortgage approvals have now declined for two consecutive months and property transactions fell in March, on an annual basis housing demand still remains strong.
“Housing demand continues to be supported by an economic recovery that is gathering pace, rising consumer confidence, low interest rates and wage growth finally beginning to outgrow consumer prices.
“However, with supply of properties being slow to respond to market conditions, stronger demand in the past year has resulted in upward pressure on house prices.”
Jeremy Duncombe, director, Legal & General, believes supply is key. “Across the UK, confidence is returning to the housing market,” he said. “House prices are increasing which is encouraging more and more people to move home.
“Although the housing market is seen as one of the key indicators for the overall health of the UK economy, and homeowners will be pleased to see the value of their property increase, growth which outstrips inflation is not a good thing. As wages fail to keep pace with house prices, especially in the South East of the country, more people are priced out of the housing market.
“Building more homes as well as having greater flexibility in mortgage products would allow more people to get on to the ladder and keep house price inflation to a more manageable level.”
Nicholas Ayre, managing director of buying agency Home Fusion, believes buyers are starting to refuse to pay the prices asked by sellers. Commenting, he said: “With prices levelling out and even tailing off a little in the past month, we could be seeing the first signs of resistance from buyers who are not prepared to pay what sellers are asking.
“If buyers are being sensible and refusing to pay over the odds because they can’t afford it, then that is a good thing. While interest rates are low at the moment, they won’t always be and working out whether you can afford your mortgage when rates do rise is a reasonable strategy.
“However, this may just be a blip rather than the beginning of a downwards trend in prices. Prices still rose on the quarter and on the year. And while the market may be adjusting, there are pockets of the London housing market where it is still crazy busy while in other parts of the country talk of a bubble is laughable. A national average house price is not at all helpful, as regional variations tend to be significant.”