09 Sep Property prices and mortgage approvals rose in August

Posted at 15:10h in Barton Wyatt by

House prices rose by 0.3% in August, bucking the seasonal downward trend, according to the latest LSL Property Services/Acadametrics House Price Index.

The increase, buoyed in part by a 1.6% rise in prices in London, leaves the value of the average UK property at £219,078, some £12,751, or 5.5%, below the peak of £231,828 in February 2008.

Although prices remained 2.2% down year-on-year, LSL estimated that the number of housing transactions would rise by 1.5% to 64,500 in August, a time of year when transactions traditionally fall but a similar figure.

David Newnes, director of LSL Property Services, which owns estate agents Your Move and Reeds Rains, said the index showed that the country’s housing market was moving in the right direction and that the outlook appeared considerably better than forecast earlier in the year.

“Mortgage finance is very cheap at present – it’s just hard to get if you don’t have a hefty deposit. With major lenders like Santander cutting their mortgage rates by 1% this week, buyers who are able to put up at least a quarter of the value of their purchase can pick up bargains. The fact that the properties are so reasonably priced is also helping allay lenders’ fears about borrowers’ ability to pay for their loans,” Mr Newnes commented.

A separate report from the chartered surveyors group e.surv showed that mortgage approvals rose by 4.3% from 49,239 in July to a seasonally adjusted figure of 49,566 in August, the highest year-on-year increase since May 2010.

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More than one in ten mortgages went to buyers with a deposit of 15% or less in August, the highest level recorded this year, suggesting that lenders are beginning to relax lending criteria for first-time buyers.

In further evidence that banks are becoming more willing to lend, the number houses worth up to £125,000, typical first-time buyer properties, accounted for 24% of all approved mortgages, the highest level since April of this year.

Richard Sexton, business development director of e.surv commented: “The property market bounced back this summer, with consecutive months of price rises following falls between April and June.

“While some regions have seen prices fall, the rate of fall has shrunk. The housing market across the country is moving in the right direction.”