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Homebuyer optimism growing

Homebuyer optimism growing

Category: Mortgages

Updated: 14/12/2012
First Published: 11/03/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Optimism appears to be growing amongst homebuyers after house prices and transaction levels increased during February.

The latest LSL/Acadametrics research showed the average price of a home in England and Wales rose by 0.3% last month, while the number of transactions increased by 2.4%.

The rise means the average home now costs £222,456, a rise of £657 compared with January.

However, the overall figure masks varying pricing behavior in different regions.

Prices in the north of England, Wales, the Midlands and East Anglia are now falling, whilst in London and the south of England they continue to rise but at a slowing rate.

The survey showed the best performance has been in the market for prime property in London and the south-east.

However, Richard Sexton, business development director of e.surv, said there are also encouraging signs from the mortgage industry which could bring about a more widespread and sizeable recovery.

"The proportion of mortgage products requiring more than a 25% deposit is at a two-year low and many of these new products are for high loan-to-values," he points out.

"Nevertheless, product numbers alone can be misleading. Lending is still constraining demand as mortgage lenders are concerned about the possibility of rising unemployment as the public spending cuts continue.

"These concerns are particularly focused on areas with high levels of public sector employment, such as northern England and Wales."

However, given that prices are rising, Mr Sexton suggests there is plenty of pent-up demand from homebuyers in the market.

"Currently, a large proportion of buyers are those able to muster sizeable deposits, but if the economic horizon clears and the barrier of tight lending criteria is lifted, we could see both demand and prices pick up relatively quickly," he adds.

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