House prices rose at their fastest rate for nearly six-and-a-half years during the first quarter as demand from potential buyers remained strong, figures showed today.
The average cost of a home was 8.7 per cent higher in the three months to the end of March than it had been in the same period of 2013, the highest rate of annual growth since October 2007, according to Halifax.
Stephen Noakes, mortgages director at Halifax, said: “Housing demand continues to be supported by an improving economic outlook, growth in employment, rising consumer confidence and low interest rates.”
But on a monthly basis prices dipped slightly, falling by 1.1 per cent during March to leave the average property costing £178,249.
The fall followed particularly strong growth seen during February, when prices jumped by 2.5 per cent.
Halifax also stressed that monthly changes could be volatile.
It added that March’s blip was only the third monthly decline recorded during the past 15 months.
When price changes are looked at on the more reliable quarterly basis, values rose by 2.3 per cent during the three month to the end of March, compared with the previous three months, the biggest quarterly jump since January 2010.
Halifax said prices were being driven up by a combination of strong demand from potential buyers and a lack of supply.
But the group said the imbalance was showing some signs of easing, with the number of new homes that developers started to build in England rising by 24 per cent during 2013 compared with a year earlier.
Mr Noakes added: “The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home.
“This will potentially encourage and enable more owners to put their property on the market for sale over the coming year, therefore boosting supply and easing pressure on prices.”
Today’s figures come after Nationwide said prices rose for the fifthteenth consecutive month during March, rising by 9.5 per cent on an annual basis.
The recent run of positive data on the housing market has caused fears in some quarters that a bubble could be developing in the market.
But figures from the Bank of England showed that mortgage approvals for house purchase actually fell by 8 per cent during February.
A further short-term dip in mortgage lending is anticipated as lenders get to grips with the new rules under the Mortgage Market Review, which comes into force later this month.
The monthly fall reported by Halifax for March should act to further ease concerns that a runaway market is developing.
Matthew Pointon, property economist at Capital Economics, said: “The stable growth in house prices is consistent with other indicators suggesting that while the housing market is continuing to recover it is not, at least at the national level, accelerating out of control.
“The most likely scenario is for house prices to make further steady gains over the coming year.
“But, at least outside central London, the conditions are not in place for prices to accelerate towards boom-like conditions.”
Looking for ideas for your child’s bedroom? We’ve picked our top 10 from what’s on the market in the UK.
1. Any young boy or girls dream bedroom.
7 bed in Barnes, £5.3m – Crayson
2. What little budding car fanatic wouldn’t love this room?
4 bed in Port Talbot, £244,995 – Barratt Homes
3. This isn’t just a bedroom it’s another universe!
5 bed in Brighton, £2.5m – Baron Estates
4. Can a room ever be too pink? We don’t think so.
5 bed in Huddersfield, £1.0m – England Residential
5. We love this adorable boat theme. Ahoy matey!
5 bed in West Malling, £665,000 – Taylor Wimpey
6. A little princess’ dream room complete with castle bed.
5 bed in Kent, £2.7m – Strutt & Parker
7. We bet your kids would go wild about sleeping in this mini forest.
5 bed in Tonbridge, £665,000 – Taylor Wimpey
8. Lego, still one of the best toys ever!
3 bed in Milton Keynes, £245,000 – Taylor Wimpey
9. We can imagine having hours of fun in here as a child.
4 bed in Hornchurch, £500,000 – Next Chapter
10. They’ll be rushing to do their homework with this cool desk.
4 bed in Essex, £675,000 – Kings Park
Is London experiencing a property bubble? Buyers make £100,000 in three months with off-plan properties
Buyers are making £100,000 in three months on new build London flats that have not even been completed, it has been revealed.
In the latest evidence of a property bubble in the capital, buyers are making six figure sums on homes that do not even exist.
One buyer bought a two bedroom new build flat in Carlton Vale in north west London just before Christmas for £400,000. She moves into the flat next week once the building has been finished. She explained it has now been valued at £500,000.
But she was not the first ‘owner’ of the property. It was a resale flat, meaning it had a previous owner – one who had already made £60,000 since building first began more than a year ago.
Buying off-plan can be seen as high risk as prices may go down as well as up. It means buyers could potential face negative equity – where the price of their home is less than their mortgage – by the time they first step foot into the property.
Carlton Vale is one of a growing number of ‘property pockets’ in London that have seen values rise sharply.
It is nestled between Queen’s Park and Kilburn Park, and near the prestigious Maida Vale. Average prices have risen more than 12 per cent in the past year to £417,760.
Jonathan Harris, of mortgage brokers Anderson Harris, said: “Off-plan purchases nearly always carry the risk that the value will drop after purchase as the initial gloss fades away.
“This aspect is heightened by the ‘bubble’ as the danger is that market values will drop, potentially leaving a purchaser with a property that is worth significantly less than they paid for it.
“There is also the risk that your mortgage is no longer sufficient to complete a purchase that you are committed to, leaving you to make up the shortfall yourself or worse still losing your initial deposit.”
Homeowners continued to focus on paying down their mortgage during the fourth quarter of 2013 despite rising house prices, figures showed today.
Housing equity withdrawal remained negative for the twenty-third consecutive quarter during the three months to the end of December, the Bank of England said.
Consumers injected £10.63bn of equity into their homes during the period, as they continued to avoid unlocking money tied up in their properties.
The figure, which was slightly down on the record equity injection of £12.99bn seen during the first quarter of last year, continues the trend started in 2008, shortly after the credit crunch struck.
It is a far cry from the situation seen during the pre-crisis housing boom, when it was common for consumers to remortgage to fund home improvements or pay for big-ticket items, such as a new car.
Equity withdrawal peaked during the final quarter of 2003, when homeowners unlocked a record £14.24bn from their homes.
But it remains to be seen if consumers will continue to focus on reducing their mortgage debt with the return of strong house price growth, or whether they will once again view their properties as a cheap source of financing for other purchases.
Nationwide yesterday reported that house prices rose for the fifthteenth month in a row during March, as demand from buyers remained strong.
Prices were 9.5 per cent higher than in the same month of 2013, the strongest rate of annual house price inflation recorded since May 2010.
Meanwhile, the Bank of England said mortgage availability had increased for the seventh consecutive quarter during the first three months of 2014, particularly for people looking to borrow a high proportion of their property’s value.
It said there was a significant increase in the willingness of lenders to advance money to people with a deposit of 10 per cent or less, although this improvement was in part driven by the Government’s Help to Buy scheme.
The trend is set to continue going forward on the back of the improved economic outlook and an increased appetite for risk among lenders, as they look to boost their market share.
Demand from borrowers wanting to buy a property is expected to rise “significantly” in the months ahead, according to the Bank’s Credit Conditions Survey.
Lenders are also anticipating a pick up in remortgaging activity during the second quarter of the year, following a dip in the first three months, as homeowners take advantage of recent house price gains to lock into more competitive deals.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With demand for mortgages increasing significantly, lenders are preparing to make more products available to borrowers in the second quarter of the year.
“All the lenders we speak to are keen to do considerably more lending this year than last but with the Mortgage Market Review ensuring that borrowers can afford those mortgages when interest rates rise, we aren’t seeing a return to reckless lending.”
If ever proof was needed that small is beautiful then the tiny county of Rutland is it.
Sandwiched between Lincolnshire, Leicestershire and Northamptonshire, Rutland is 147 square miles of lovely countryside and unspoiled villages. It is home to one of Europe’s largest man made lakes, Rutland Water, and has only two towns, both lovely, to its name.
It is also highly affordable – but with strong signs of property growth.
Average property prices currently stand at £284,145, up 5.43 per cent in the last year.
Househunters usually start their search in one of the Rutland towns.
Uppingham has a historic town centre, which is simply a pleasure to walk around and the retail therapy is great with stacks of antique shops and art galleries, as well as plenty of tea rooms and traditional inns. It is also the home of the eponymous public school (alumni of Uppingham include Stephen Fry), and there is plenty going on with a theatre, regular concerts, and surfing on nearby Rutland Water.
“It is a very sociable little town,” said Jamie Tyler, a director at Moores Estate Agents. “There are a lot of really nice new bars and eateries opening up.”
Average prices in Uppingham stand at £238,070 and Tyler suggests budgeting from £125,000 for a two bedroom terrace up to £600,000 for a five bedroom house with gardens in the town centre.
The town attracts early retirees as well as young families, and Leighfield Primary School and Uppingham Community College (seniors) are both rated “good” by the Government schools’ watchdog.
The other option is Oakham, another town which gives its name to a leading public school. Oakham is a cracking market town and its big selling point over Uppingham is its station – trains to King’s Cross take one hour 40 minutes.
Darren Christie, a partner at Fine & Country, praises Oakham’s unspoiled feel, its independent shops and proximity to lovely countryside. And, in the state school sector, Oakham C of E Primary School is rated “good” by Ofsted.
The average property price in Oakham is £284,145, up 5.43 per cent in the past year.
“There is a real mixture of houses in the town centre, from Victorian town houses to little thatched cottages, and pockets of modern developments,” adds Christie. “Prices vary from around £200,000 plus for a townhouse, ranging up to around £500,000 for a modern five bedroom home.
If you would prefer village life then there are also some great choices within Rutland.
Hambledon, which sits on a peninsula of Rutland Water is described by locals as the “Sandbanks of the Midlands” but prices are far below those in the Dorset seaside enclave.
Hambledon does have amazing water views but, on the downside, the town gets very busy with tourists in summer. And, Tyler points out, amazing views don’t come cheap. “A lot of the properties have been redeveloped into big houses, and they all sell for at least £1m – we have even sold plots for £1m,” he said.
A cheaper option would be a house without views in the village centre – but still expect to pay £400,000 to £500,000.
If Hambledon is too rich for your blood then Christie suggests Empingham. “It has a main road which runs through it, but once you get off that you just have a very traditional, unspoiled village,” he said. “It has a pub, a village shop, a church, cricket club, and outstanding-rated primary school. It is well looked after for the size of the village.
A historic two bedroomed cottage in Empingham would cost around £250,000, but prices range up to around £1.5m for a large period home with an acre of gardens.
Properties for sale:
1. Rutland has a great stock of period stone built homes – think Cotswolds at a fraction of the price – like this five bedroom property in North Luffenham near Oakham
2. If property was a beauty pageant Georgian homes would tend to end up wearing the tiara, and Rutland has some gems like this seven bedroom house on Oakham High Street:
3. The Rutland market is dominated by houses, but that doesn’t mean there aren’t some great converted flats to be had: