Confidence returning to housing market
There are signs that confidence is returning to the housing market as buyers are encouraged by the end of the conflict in Iraq and good economic conditions, according to the latest survey.
The Halifax has found that house prices increased by 1.3% in August, slightly above the monthly average of 1.1% recorded over the last three months but the same as in July. The annual rate of house price inflation has increased by 0.1% to 19.1% in August.
The end of the Iraqi war has boosted confidence, which coupled with the highest level of employment on record and the lowest interest rates since the 1950s, has led to strong housing demand according to the bank.
The Halifax reports that the number of homes being bought and sold have increased. Figures from the Inland Revenue show that the number of property transactions in England and Wales bounced back from a seasonally adjusted 103,000 in June to 115,000 in July, stopping the steady downward trend that had been in place since late last year.
Estate agents have also noted an improvement in confidence in the market. The bank reports more buyer inquiries, greater competition for properties and signs that more buy-to-let investors are coming back into the market.
The increase in activity mirrors yesterday’s figures from the Bank of England, which showed a 15% increase in the number of mortgage loans approved for house purchases.
The Bank of England reported that July saw the highest level of new mortgages since November last year.
The average house price in the UK now stands at £133,908 in August compared to £132,079 in July.
The Halifax argues that house price growth will slow gradually over 2003 and into 2004 as first time buyers are priced out of the market. The bank claims that the effect will be a steadier rate of house price growth over 2004 when compared to last couple of years.
Martin Ellis, Chief Economist at the Halifax, commented, ‘We expect the rate of house price growth to slow gradually over the remainder of 2003 and into 2004 as the rapid increase in house prices in regions outside southern England over the past year or so make it increasingly difficult for first-time buyers, in particular, in these parts of the country to get a foot on the housing ladder. Accordingly, we are likely to see a more even pace of house price growth across the regions in 2004 than we have seen in recent years.’
