Day: 17 May 2017

Posted on

Average house price growth slowing, official figures show

Official figures from the latest UK House Price Index show that average house prices fell by 0.6% between February and March.

The data for March also shows that annual house price growth slowed to 4.1%, down from 5.8% the previous month.

The official index calculates that the average UK house price in March was £215,847.

There is again less than promising news for the capital, with the figures showing that average prices dropped by 1.5% between February and March.

London’s annual house price growth is now measured at 1.5%, well below the UK average. Despite this, average property prices in the city are still way out ahead at £471,742.

According to the index, prices in Wales have been performing strongly – rising by 1.4% between February and March, equating to annual growth of 4.3%.

The UK House Price Index replaced the Office for National Statistics and Land Registry indices last summer. It is published some way behind other reports like Rightmove’s – which monitors asking prices – due to the fact that it takes into account actual sales.

“While it may look as though house price growth is beginning to slow down, affordability remains a key concern for many aspiring homeowners struggling to get a foot on the ladder,” says John Goodall, chief executive and co-founder of Landbay.

“Furthermore, rising inflation and recent warnings from the Bank of England that a year of falling wages lies ahead means we’re unlikely to see any immediate relief.”

Jeremy Duncombe, director of Legal & General Mortgage Club, says: “With less than a month until the General Election, it is clear that housing needs to be a priority in all of the party’s manifestos.”

“The current government has made some admirable steps forward in tackling the serious shortage of affordable homes across the UK through the Housing White Paper, but there is still a long way to go.”

Posted on

Property cash purchases at new high

New research from IMLA has found that a record amount of cash was injected into residential property purchases in 2016.

According to IMLA, the total value of residential house purchases in the UK reached £261bn in 2016, with £152bn provided by mortgage finance and £109bn made up of cash funds including the proceeds of existing property sales.

Cash funds have risen by 12% from 2015 and 57% since 2013, far outpacing the growth of mortgage lending over the same periods. Growth of £6.8bn in house purchase mortgage lending from 2015 to 2016 was overshadowed by the extra £11.8bn in cash contributions. As a result, cash provided 41.8% of funds for residential house purchases.

Three-quarters of the annual growth in house purchase lending came from first-time buyers in 2016. However, the growing influence of cash in the house purchase market has potentially negative implications for aspiring homeowners and home-movers.

Analysis from the CML suggests that outright cash transactions (with no mortgage finance involved) continue to make up just over a third of all transactions.

Peter Williams, Executive Director of IMLA, commented: “The shift towards cash is partly a consequence of trying to manage housing demand by restricting mortgage supply, with Financial Policy Committee actions in 2014 quickly layered on top of the Mortgage Market Review affordability rules. With the market having cooled and interest rate expectations shifted since then, there is a legitimate case for asking whether current restrictions on lending are still appropriate or have become over-zealous.

In the meantime, rising house prices and stagnant incomes mean that access to wealth as well as mortgage finance will increasingly separate the ‘haves’ from the ‘have nots’ in the property market if the importance of cash continues to grow. The recent Housing White Paper was a missed opportunity to take strong action on housing supply, and we must hope that the upcoming election manifestos will be used as an opportunity to put that right.”