The average house price in England & Wales in June is £364 (0.2%) higher than in May, according to the latest house price index from LSL Property Services/Adacametrics.
It now stands at £232,801, which for the second month in succession sets a new record level, exceeding the previous peak reached in February 2008 at the height of the last housing boom. On a monthly basis prices have increased or remained constant in 18 of the last 19 months.
Only in August 2012 was there a fall in average house prices, during the London Olympics, when many were distracted from the purchase of a family home.
Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, said: “It’s taken almost five years, but the housing market finally looks set on the road to recovery from the 2008 downturn. The average house price is up £5,664 over the past year, and up £364 on a monthly basis. House prices have never been higher. They reached a record high in May and set another record in June. The catalyst has been a significant improvement in mortgage availability which is thawing the frozen first-time buyer market. Lenders are more willing to lend to high LTV borrowers, and this spate of activity at the bottom end of the market is reverberating all the way up the housing chain. The plethora of attractive mortgage deals on offer is working wonders and wider pools of buyers are flocking to the market.
“Let’s be clear though, the market still has a long way to go before it reaches its pre-2008 health. Sales figures for June 2013 are below the level of the previous three years, and first-time buyer numbers are still low outside of the South East. Obtaining mortgage finance is still difficult by historic standards, and the shortage of properties on the market is a key stumbling block to a more sustained climb in transactions. There needs to be continued confidence in the property market’s bounce back to persuade more people to trade up and put their home on the market. The lack of supply is helping to boost prices but in the process making it more difficult for first-time buyers. The market needs an increase in supply to ensure prices don’t rise out of equilibrium.
“Although house prices may have risen significantly in June 2013, the reality is that the annual growth of 2.5% is being driven by London. Figures are slightly misleading, reflecting the influx of foreign buyers who are boosting property price growth in the capital. Money is pouring into prime areas from cash buyers and international investors looking to store their wealth in bricks and mortar. This growing demand for properties in central London areas is proving to be an important contributor to the 7.9% growth in average prices in London.
“The government must further support first-time buyers in order to close the gap between opposite ends of the property market. With economic conditions improving and consumer confidence rising, there are strong hopes that both the Funding for Lending and Help to Buy schemes will encourage more buyers and sellers to return to the market, which will support prices and may lead to long term recovery.”