LSL: House prices at record high
Values increased by 0.5% in September with London continues to lead the way on a regional basis with an annual house-price growth in the past three months more than double any other region
David Brown, commercial director of LSL Property Services, comments: “2013 will be remembered as the year first-time buyers returned to the market.
“Up until this year the market was still in trouble thanks to the financial crisis. It was a long way from recovery.
“What a difference six months makes. In that time we’ve seen banks ease criteria on mortgages for people with small deposits, which has opened the door to new buyers who have spent years on the outside looking in. More people are in work. Inflation has begun to ease. And clearer forward guidance on interest rates has brought more certainty and confidence.”
Brown said the return of first-time buyers was also helping to unclog the “blockage at the bottom end of the market”.
He said: “Demand has increased significantly in a short space of time, and raced ahead of the supply of homes, which is causing house prices to rise. Think of it as shaking up a can of coke. When it is opened, you get the fizz, froth and overflow. Then it flattens out again. That’s what we’re seeing with the housing market.
“Demand has been bottled up by a lack of mortgage finance, but now mortgages have been made more accessible the backlog of buyers has spilled onto the market after years of frustration, scrimping and saving.”
But Brown warned that recent improvements in the market still only represent a fledgling recovery.
Brown said: “First-time buyer numbers are still some way short of their historic levels. It is not a ‘boom’. Or a ‘bubble’. It is a market correction, albeit a fairly quick one.
“The only ‘boom’ is the loud noises coming from alarmists and sensationalists warning about a return to the bad old days of the 2000s. We’re not even close to that.
“There is no sub-prime mortgage lending, no lending above 95% LTV. Credit checks are tough, rates are fairly high on high LTV mortgages, and lenders now carry out stringent affordability checks for every single mortgage.”