Housing market ‘speeding towards crisis point’ as average prices up £10,000 on a year ago

House prices continued to climb in June, although the pace of annual house price inflation slowed. Today’s Telegraph said the housing market was speeding towards a crisis, with average prices across England and Wales up almost £10,000 on June a year ago.

Spicerhaart chief Paul Smith told the paper: “Along with consumer price hikes and falling wage growth, unaffordability is reaching crisis point.”

Nick Leeming, chairman at Jackson-Stops & Staff, echoed the point, saying: “While this is good news for many home owners seeing the equity in their home increase, it does place the goal of home ownership further out of reach for aspiring first-time buyers.

The Land Registry data also revealed 69,545 transactions in April, the most recent figures available, showing that sales volumes in the UK grew 3.6% annually.

However, there was a big slump in transactions in April last year following the introduction of the 3% Stamp Duty surcharge on the purchases of additional homes, so the annual rise is from a very low base.

The new figure for transactions also hides big regional differences.

The south-west saw just a 0.22% increase in transactions annually at 9,346, while sales in the north-east were up 9.7% to 3,639. The south-west also saw volumes grow 9% to 6,489.

Activity in London was up just 1.3% to 5,823 sales. The capital was also the only region to see prices fall on a monthly basis, dropping 0.7% to average £481,556.

The east of England, which saw volumes increase 2.1% to 6,529, recorded the highest price growth, up 7.2% to £286,623 annually.

The smallest house price growth was in the north-east, up 2.5% annually to £130,065.

Overall, price growth slowed from 5% to 4.9% annually to £223,257, or 0.8% on a monthly basis. However, it still meant that house prices in England and Wales are up an average of almost £10,000 on June last year, when they stood at £214,000.

Separately, data from trade body UK Finance showed that mortgage lending in June rose. There were mixed messages from the organisation: it warned of a softening market but also said that lending for house price purchase could show some growth in the second half of this year.

First-time buyers borrowed £5.9bn in June, up 26% on the previous month and 9% on June 2016. This equated to 36,000 loans, up 22% month-on-month and 6% year-on-year.

Home movers borrowed £7.8bn, up 26% on May and 15% year-on-year. This equated to 36,500 loans, up 24% month-on-month and 9% compared to a year ago.

Remortgage activity totalled £6bn, up 5% by value on May and 7% on a year ago. The number of remortgage loans totalled 34,300, up 5% month-on-month and 6% on a year ago.

Buy-to-let lending also rose, totalling 3bn, which was up 3% on May and up 3% compared to June 2016. This equated to 19,700 loans, up 3% month-on-month and 6% year-on-year.

Paul Smee, head of mortgages at UK Finance, said: “June’s figures show a busy month in the mortgage market, with home movers having their highest monthly activity levels for over a year and an especially high number of loans for first-time buyers. Buy-to-let activity remains subdued compared to its 2015 peak but consistent month-to-month since Stamp Duty changes in April 2016.

“But there are also signs of a softening market and we are not anticipating that this performance will be sustained in the second half of 2017.

“A slightly lop-sided market could well show some growth in house purchase lending but alongside reduced remortgage and buy-to-let activity.”


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