Whilst optimism has spread throughout the nation as the annual shift in house prices for the 12 month period across England and Wales rose to 2.5% over the whole spectrum of residential property. According to the Land Registry, the numbers of transactions in the lower end (sub £175,000) of the market rose approximately 8% above normal.
Optimism that these statistics provide evidence of new house purchasers moving onto the housing ladder is reasonably well founded. It will, however, take a larger level of sustained and continuous growth to prove this.
Some evidence was noted of a number of transactions under £175,000 taking place to take advantage of the last period of stamp duty relief. To what extent these are home purchasers as against investors, it is not yet possible to confirm. For the second quarter in a row to December 2009, there was an increase in lending on buy to let mortgages.
When the number and composition of transactions is released by the land registry over the next few months, the market will have a more accurate idea of the true state of the market without the Government’ s artificial and temporary boost of increasing the stamp duty threshold. This expired on 31st December 2009. January 2010’s figures will not be released until later this month.
The upper end of the market has continued to improve consistently since late 2008. This sector often has different rules and operates in advance of the market as a whole as persons involved in this sector are less dependent on jobs, mortgage availability and other similar constraints.
The Land Registry reported that, as of the end of December, the average price of a house was £161,783; the monthly change to house prices comprised an increase of 0.1%, and the rate of annual change has now increased to a growth rate of 2.5%.
Interestingly, as a perspective, inflation is now running at 2.9%, with the next Bank of England announcement next week.
Newsletter Editor 10.02.2010