Property prices hit record levels
On a monthly basis prices have increased or remained constant in 18 of the last 19 months. Only in August 2012 was there a fall in average house prices during the London Olympics when many were distracted from the purchase of a family home.
Peter Williams, housing market specialist and chairman of Acadametrics, said: “On an annual basis the average house price has increased by 2.5% since last June. This level of house price inflation is below that of the Office of National Statistics annual RPI Index for May 2013 of 3.1%, so in real terms house prices have fallen over the last 12 months.”
Williams said the optimism that might be derived from the generally upward trend in prices is somewhat dampened by the knowledge that outside of London the picture of recovery and return to growth is more mixed.
But the main house price indices are now all pointing towards continued house price inflation and a slow but steady improvement of housing markets across England and Wales.
This mimics the generally more confident views of the economy that have emerged in recent months. Mortgage lending has been boosted by a range of government initiatives and we are finally seeing house builders moving to increase output.
The quarter two Credit Conditions Survey from the Bank of England was more upbeat.
It noted that in the 3 months to the end of May there was an increase in the availability of secured credit to households with lenders expanding activity to support their market shares as well as adjusting their risk appetite upwards.
This last point is quite significant and is reflected in increased numbers of higher loan to value products appearing on the market.
Looking forward the Bank noted that there was an increase in loan approvals in 2013 quarter 2, the first time a positive balance has been recorded since 2011 quarter 3 and that this expansion of availability for secured credit was expected to continue, across LTV ratios, in 2013 quarter 3.
Williams said: “This is encouraging. At the same time recent industry reports on the housing market produced by both the RICS and the Intermediary Mortgage Lenders Association raise real concerns about the future shape and direction of housing policy and the housing market, with both bodies calling for more dialogue with the government.”
He added: “There is a general view that the short-term outlook is quite promising but that in the medium term, as government initiatives fall away, market uncertainty will return.
“The big question will be how much of the momentum currently being built up will be sustained.
“If buyers and sellers continue to return in numbers to the market supported by rising prices and more credit then the greater the likelihood this forward momentum can be sustained. Time will tell!”