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News: UK property up £7,000 on last year, say LSL/Acadametrics

Fri, 08 Feb 13

UK property is £7,000 more expensive than last year, according to new figures.

The house price index from LSL Property Services/Acadametrics shows UK house prices edged up by 0.2 per cent in January from December to £227,478, 3.1 per cent higher than January 2012.

David Brown, commercial director of LSL Property Services, comments: 'January’s figures are better than expected. Values have climbed £7,000 in just twelve months. Sales are up 8%. And prices have increased for eight consecutive months. All of this bodes well for 2013. It’s particularly encouraging given the state of the economy.

'Market conditions are certainly improving. Funding is cheaper, thanks to a combination of the Funding for Lending Scheme and an improvement in investor confidence. And mortgage lenders have started competing for more business from high LTV borrowers, which is driving down mortgage rates to record lows. Lending criteria are becoming less restrictive, so borrowers no longer have to cross such a painfully high financial threshold in order to get a mortgage. That’s a source for optimism, as is rising employment and a mini-revival in the first-time buyer market. These are rays of light which will help brighten the housing market in 2013.

'But there is a more sobering sub-plot to this good news. Sales activity and prices in London are charging along at a furious pace, which is dragging national house prices up on its coat tails. The capital is in a league of its own. Take the capital out of the equation, and the average rate of house price growth in England & Wales falls to a mere 1%, reflecting a slower rate of improvement outside of the south-east. We’re seeing a three-speed housing market emerge. On the top rung are fickle foreign buyers and the ultra-prime, with London on the second rung, and the rest of the country languishing at the bottom.

'With the recovery of the housing market outside of London still on such a precarious footing, house prices and sales in 2013 will closely be tied to how well banks cope with the financial grenades being thrown their way by regulators and the eurozone. George Osborne’s plans to electrify the ring fence separating retail and investment banking could give lenders a sharp shock in 2013. They will be forced to focus their energy on implementing drastic reforms, rather than on ways to improve lending levels and mortgage availability. And capital adequacy rules will leach away funds which could be used to jumpstart the first-time buyer market. There are also mounting fears over a triple-dip recession. If the economy does begin to congeal in 2013, it will undo much of the gains made in the mortgage market over the past few months. With any luck, George Osborne will be bold and use March’s budget to implement a more dynamic economic growth strategy. That should see the housing market really kick on in 2013 and put it on the road to a sustained recovery. All eyes on you, Mr. Osborne.'

Dr. Peter Williams, housing market specialist and Chairman of Acadametrics, adds:

'Over the last year average house prices in England & Wales have risen by 3.1%, in line with the annual rate of inflation (RPI was 3.1% in December). If, however, house price inflation continues at the same rate as over the last eight months, the relatively high price rises experienced in the early months of 2012 will drop out of the annual statistics during the first half of 2013, leaving the figure below the forecast RPI level.

'There are, nonetheless, a few potential factors which might suggest an increase in the current rates of monthly house price rises. Improved mortgage volumes coupled with lower mortgage pricing are probably the most obvious; however, favourable employment statistics and an upturn in first time buyer activity point to increased confidence among both lenders and buyers. Hopefully this will tempt more sellers back into the market and lift the level of transactions. Time will tell, but with new housing remaining in short supply, prices will be affected by such shortages, except in those areas where low demand and over-supply remain.'


See also: House Prices

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