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Mixed house price fortunes continue

Mixed house price fortunes continue

Category: Mortgages

Updated: 06/03/2012
First Published: 06/03/2012

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 It is now over 6 months old so the content may be out of date.

The mixed fortunes of house prices in the UK continued during February, new figures have revealed.

On a monthly basis, prices fell by 0.5% in February; this follows a 0.6% rise in January and continues a mixed picture of rises and falls.

Over the last six months, there has been an increase in house prices in three months, with falls recorded in the other three months.

It means that nationally, the average level of house prices has changed very little to that seen last spring. The UK average price in February, at £160,118, was similar to that in April 2011 (£160,393).

"This stability in prices is explained by the fact that market conditions have changed very little over this period with demand supported by low interest rates and supply remaining tight," said Martin Ellis, housing economist.

One of the trends seen in February was the increasing proportion of first time buyers – the second rise seen in consecutive months.

This, together with a 7% increase in the industry-wide number of mortgage approvals for house purchases in January, suggests that the scheduled ending of the temporary increase in the starting threshold of stamp duty for first-time buyers from £125,000 to £250,000 later this month is encouraging some to buy before the threshold reverts to the lower level.

It is also hoped that falling inflation could help support housing demand in the coming months.

The annual rate of consumer price inflation has fallen in recent months from a peak of 5.2% in September 2011 to 3.6% in January 2012 and is expected to decline further in 2012.

"Many of the economic statistics released in recent weeks have also been encouraging, suggesting that the UK may avoid slipping back into recession," added Mr Ellis.

"These developments are positive for the housing market outlook. Significant uncertainties, however, persist and the prospects for house prices during 2012
will, to a large extent, depend on events in the Eurozone and the potential knock-on effects on the UK ."

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