Taylor Scott International News
House prices in the UK edged up 0.2% in May but annual growth slowed to 4.7% to an average of £204,368, according to the latest index to be published. The annual pace of house price growth remains in the fairly narrow range between 3% and 5% that has been prevailing for much of the past 12 months, according to the date from the Nationwide, one of the leading home lenders in the UK. ‘In the near term, it’s going to be difficult to gauge the underlying strength of activity in the housing market due to the volatility generated by the stamp duty changes which took effect from 01 April,’ said Robert Gardner, Nationwide’s chief economist. ‘Indeed, the number of residential property transactions surged to an all-time high in March, some 11% higher than the pre-crisis peak as buyers of second homes sought to avoid the additional tax liabilities,’ he pointed out. ‘While cash purchases accounted for a significant proportion of the increase in activity it is not possible to determine whether or not these were purchased by landlords. Mortgage data suggests that, while buy to let purchases were a major driver of the increase, the purchase of second homes also accounted for a substantial proportion,’ he explained. The report also shows that the number of home mover mortgages, which is where second home purchases with a mortgage would show up, increased sharply in March. Gardner said that house purchase activity is likely to fall in the months ahead given the number of purchasers that brought forward transactions. ‘The recovery thereafter may also be fairly gradual, especially in the buy to let sector, where other policy changes, such as the reduction in tax relief for landlords from 2017, are likely to exert an ongoing drag,’ he added. But he also pointed out that healthy labour market conditions and low borrowing costs are expected to underpin a steady increase in housing market activity once stamp duty related volatility has passed, providing the economic recovery remains on track. ‘However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will tilt the demand/supply balance in favour of sellers and exert upward pressure on price growth once again in the quarters ahead,’ he said. He added that according to the Royal Institution of Chartered Surveyors (RICS), the number of properties on estate agents’ books was already close to all-time lows on data extending back to the late 1970s. According to Matt Andrews, managing director of Bluestone Mortgages, consumer confidence is still rising, so with more people looking to secure lending it is important to see some innovation come into the sector to help more people get onto the housing ladder. ‘In order to help those who currently struggle to gain access to lending, such as people who have experienced a genuine blip on their credit scores, or who only have limited trading histories, we need to offer a more… Taylor Scott International
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