House prices hit another record high in July
• Beats previous peak in 2008
• House prices up £5,796 in the past twelve months, reaching a high of £232,969
• With first-time buyers accounting for 45% of all house purchases
David Newnes, director of LSL Property Services plc, owner of Your Move and Reeds Rains estate agents, comments: “House prices have never been higher. 2013 has marked the time when the property market recovered from the 2008 financial crisis. Prices are up £5,796 over the past year, thanks largely to a significant increase in mortgage lending to first-time buyers. House prices are growing steadily; signifying long term recovery is becoming a reality. Mortgage lending in May was up by over a fifth compared with April and 17% stronger than a year ago, while the number of first-time buyer mortgages are at the highest since 2007.
Typically the property market flourishes in the summer, and July sales are the highest so far this year. But the improvement is more than just a seasonal trend. The market is palpably stronger than a year ago and confidence is returning to lenders and buyers. The Funding for Lending scheme can take plenty of the credit, as can Help to Buy. Both schemes have helped banks boost first-time buyer lending by providing them with credit to offer more loans to new buyers and reduce rates on house purchase mortgages. Funding is more accessible for lenders, while banks are more confident than they were six months ago – which bodes well for the future.
But this improvement continues to be powered by the strong performance in the capital, where prices are rising far faster (7.1%) than other parts of the country. Domestic and foreign buyers’ interest for bricks and mortar in London appears to be undiminished. Supply is restrained, and without a sudden rush of properties hitting the market, prices will rise even more over coming months. The bottom line is that the divide between London and the rest of the UK housing market is deepening, with parts of London operating at an entirely different level from the rest of country, and even the rest of the capital.
Despite this overall improvement in the market, the level of first-time buyer activity is still around half a fraction of what might be considered normal levels. Both the lack of housing supply and rising competition in the property market are supporting prices, but at the same time making it more difficult for first-time buyers. The Government urgently needs to address housing supply if it is serious about boosting home ownership levels. One way would be to remove stamp duty which is a disincentive to buying for both home movers as well as first time buyers.”