House prices may be rising on an annual basis, but there are signs that they could be stabilising in the short-term. Official figures from the Land Registry show that, in June, prices grew by 6.4% year-on-year – but there was no monthly price change whatsoever.
This should dampen any fears of an impending bubble, with the rapid pace of growth witnessed in the previous few months starting to moderate. Not only that, but average house prices – which currently stand at £172,011 – are still almost £10,000 lower than the pre-crisis peak recorded in November 2007, when a typical UK property cost £181,466.
As the market has come to expect, London posted the biggest rate of annual growth, with prices rising by 16.4% over the last 12 months. Other areas saw a far less significant level of change – the North East, for example, posted the lowest annual price growth of just 0.8% – and the monthly figures pose even less cause for concern.
Just three regions saw price growth between May and June, led by the West Midlands which saw growth of 1.9%, while prices in London increased by just 0.1%, indicating that even this market may be starting to cool. This meant that seven regions posted monthly falls, the most significant being in Yorkshire and The Humber, which saw prices drop by 1.3%.
Analysis would suggest that this cooling of the market is the a result of various measures having the desired effect, specifically the new affordability criteria following the Mortgage Market Review (MMR) and Government-imposed loan-to-income caps, while speculation over an impending change to base rate could be putting some potential buyers off taking the plunge.
However, this may not be the best course of action. Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), comments on the findings:
"As house prices continue to rise and an increase in the base rate looms on the horizon, it appears many potential buyers are losing their nerve.
"However, today's Land Registry data suggests consumers should think twice before shying away from the property market. Average house prices stayed stable in June and remain £10,000 lower than their peak in November 2007, suggesting homes are more affordable across much of the country than some might think.
"While interest rates are bound to rise in the future, the Bank of England has repeatedly confirmed its commitment to making very gradual and cautious increases to the base rate. Households are being given plenty of warning to consider how to absorb the impact on monthly mortgage repayments.
"Financial assistance for first-time buyers struggling to pull together a deposit has also seldom been higher, with lenders increasingly offering new Help to Buy mortgages or extending their criteria to allow access to the property ladder with just a 5% deposit.
"Rather than being put off by rising house prices, consumers should make the most of current low rates and increased financial assistance by locking in to a favourable deal sooner rather than later."
It's good advice, particularly as mortgage rates are already starting to creep up. Fixing to a low-rate mortgage can guarantee your payments won't rise significantly in the near-future – a great way to help you budget – so you won't be left struggling as soon as base rate rises.
And, if you're able to keep your repayments low, you may want to consider overpaying your mortgage. Not only will it reduce your overall balance, but it could potentially help reduce your loan-to-value ratio so you can get a better deal when it's time to remortgage. All in all, it could be a great time to get on board, so see what deals are out there to take advantage of a more stable housing market.
Compare Mortgages with mortgage calculator
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.