As prices stagnate rents rise
The trend for house price increases to slow across England and Wales has been confirmed by latest figures from the Land Registry. Prices rose by 0.4% in July but the annual rate of increase fell back from 8.5% to 6.7%.
The average house price in England and Wales went up to £166,798, just £1,864 higher than in January. The annual rate of house price inflation has now fallen for two months in a row, after picking up for the previous 15 months.
In the past year, house prices have grown most vigorously in London, where they rose by 1.6% in July alone, taking the annual increase in the capital to 12.1%. That pushed the price of the average London home to up to £343,730.
Prices also rose in the past 12 months in most other parts of England and Wales, though not as strongly, but they fell in the North East of England by 1.4%, and in the North West rose by just 0.3%.
Brighton and Hove saw the biggest price rises at 17% during the past year.
The number of homes sold in England and Wales averaged 48,219 in the four months from February to May this year. That was higher than the same period last year, when the monthly average was 36,947 during the nadir of market activity. Sales have picked up since then, alongside prices.
However, “transaction volumes, while not at 2006 levels, are increasing slowly,” the Land Registry said. The number of brokers saying rents increased in the three months to July exceeded those reporting declines by 27pc, a survey published by RICS found. In the previous quarter, 30pc more reported increases than drops.
The lack of buoyancy of house prices is already having knock-on effects. The Royal Institute of Chartered Surveyors (Rics) has revealed that a third more respondents predicted higher rents overall in the next quarter than those who forecast a decline while demand for house rentals outstripped that for flats.
Borrowers have been struggling to secure significant deposits of at least 25% to secure the best mortgages rates. They are also concerned about making large financial commitments amid widespread job insecurity in the fragile economic recovery and the rising cost of living as inflation escalates.
Banks have restricted loans for buy-to-let transactions, reducing the number of rental properties entering the market, and landlords are showing little appetite for selling properties after tenants move out.
The number of mortgages approved in the UK dropped for the second month in a row in July to hit a five-month low, the British Bankers’ Association revealed this week. Home loans slid 2.5% from the previous month to 33,698, or just 1,000 a day. The total is down 18.5% from a year earlier.
