UK house price rise expected to continue through the year
There has been two complimentary pieces of good news about house prices this week. Firstly, house prices in England and Wales have risen month-on-month for the first time since January 2008, according to the Land Registry.
The 0.1% rise in June compared with May brought the value of the average home to £153,046, the survey found. The survey compares the price of homes sold now with the price paid before.
This is the first time in well over a year that the monthly change has been positive. However, as the monthly increase is only 0.1%, the movement does not yet signal a return to solid growth.
The survey is widely considered to be the most authoritative property price survey because it measures the change in prices by recording completed sales rather than mortgage data.
Over the year to June, prices of detached homes in England and Wales have fallen the least, by 12.2%, the data revealed. Semi-detached homes (down 14.3%), terraced houses (down 14.6%), and flats or maisonettes (14.8% down) all witnessed bigger falls in value.
During the same period prices fell the most in the north-east of England, a fall of 15.9%, and the least in the West Midlands, which saw a drop of 11.9%.
The average price for a home in London is now £301,859. In the North East it is £106,424. On a local authority level, Middlesbrough experienced the smallest annual house price fall in June, down 7.9%, with Luton seeing the biggest fall, down 23%.
The slump in activity in the housing market at the start of the year was revealed by the number of transactions, which dropped to 30,997 in January to April, from 59,948 during the same period a year earlier.
This affected all sectors of the market, but was at its peak among the largest properties in England and Wales. There were 100 homes sold for more than £2m in April 2008, but a year later this had dropped to 36.
The second piece of good news is that although this month’s price rise was very small, it now looks like house prices will eventually end the year higher than they started.
Analysts now believe that there has been a pool of prospective buyers who were “ready and able” to buy during the credit crunch but had been put off by the uncertainty in the economy.
Now the worst of the crisis is over, or averted, these buyers have come back to the housing market, encouraged by low interest rates. This rise in demand and activity has coincided with few properties being put up for sale and so prices have bounced upwards.
No-one should believe that the housing market is back to business as normal because the unemployment lag could still drag it back down again later this year or even next year. But for now, the market is once again lively and providing opportunities for many.
