Housing Market Shows Well In March but Outlook is Less than Optimistic for Future
The average annual house price in England and Wales fell by 0.6 per cent in March to £160,372 according to the latest data from the Land Registry’s House Price Index. There was also a monthly decrease of 0.6 per cent when compared to the average level in February. The highest increase in the average house prices over the last 12 months again occurred in London with a measure of 4.2 per cent increase. The largest increase for the month occurred in Wales by 2.0 per cent while the largest annual decrease of 3.5 per cent was in the North West and the largest monthly decrease of 2.6 per cent was in the North East.
The overall average increase in house prices is being credited to the ever strong London housing market as well as the stamp duty holiday that ended in March. The stamp duty holiday brought out an increase in first time buyers coming to the market looking to take advantage of the savings offered.
There is a less optimistic outlook for the upcoming months in the housing market. Mark Blackwell, managing director of xit2, the property data specialist, remarked on the recent movement in the housing market saying, “The fillip – in terms of both prices and activity – we saw over the winter has turned out to be something of a false dawn. The situation is only going to get worse; tougher times lie in wait for the housing market over the next few months. Lending to new buyers will drop sharply this quarter as mortgage lenders struggle to cope with their increased funding costs.
“Up until now, the banks have absorbed increasing costs rather than passing them onto the consumer. That policy has veiled serious underlying weaknesses in the mortgage market and the way it’s funded. Now lenders’ balance sheets are stretched to breaking point, those weaknesses are coming to bear.
“Lenders have told the Bank of England they’ll be forced ship extra costs onto customers in the form of higher rates and fewer high LTV loans. This will put the brakes on first time buyer activity, and reverberate through the rest of the market.”