Prices went up by 6.7% over the past year, but experts remain cautious as first-time buyers continue to struggle
House prices in England and Wales have increased by 6.7% during the past year, taking the average property price to £166,798, according to figures released by the Land Registry today.
Nine regions experienced increases in their average property values over the last 12 months, with London seeing the biggest increase of 12.1%. However, properties in the north-east fell in value over the year by 1.4 per cent.
Prices went up by an average of 0.4% from June to July. Homes in the south-west experienced the greatest monthly rise with a movement of 2.2%, while Wales experienced the most significant monthly price fall, of 1.1%.
The most up-to-date figures available show that during May 2010, the total number of completed house sales in England and Wales rose by 8% to 49,412 from 45,814 in May 2009. However, purchases of more expensive properties soared with the number in England and Wales sold for more than £1m increasing by 67 per cent between May 2009 and May 2010, from 255 to 426.
David Newnes, the managing director of LSL, owner of national chains Your Move and Reeds Rains, said: "House prices showed signs of growth in July as buyers took advantage of a slight easing in lending conditions to secure their new home.
"That's not to say the house prices will resume a sustained upwards climb. We don't expect a return to the mini-boom of late last year, but the likelihood of a significant slide in prices is small too – it is more likely we will see steady change.
"Monthly house price fluctuations are likely to continue in the short term, and there will be strong regional variations, particularly as the coming budget cuts hit some parts of the country more severely than others."
He added that longer term recovery in the housing market depends on lenders offering first-timers more affordable mortgage products. "Thousands of would-be buyers are waiting for the finance to grasp the first rung on the property ladder, and unlocking this demand is crucial to the market's recovery," he said.
Jonathan Moore, director of www.easyroommate.co.uk, agreed: "House prices climbed up in July – but let's not get carried away. Prices have fluctuated in recent months – and different indices are reporting conflicting results. But one thing is clear. Would-be first-time buyers are still being priced out of the market. Halifax estimates a house is 4.75 times the average first-timer's wage – and that's for those lucky few who can get a mortgage.
"In addition to unaffordable house prices, many buyers can't stump up the huge deposits lenders require. Many would-be buyers are being forced to remain in flatshares and rented accommodation for longer while they wait for the situation to improve."
However, the Primelocation.com Rime Index for August, also out today, shows that following four months of healthy growth, the average price of a UK prime property (the top 25% of all UK property by value) slipped 0.3% to £457,052, while the average platinum property (the top 10% by value) has fallen by 0.4% to £638,366. Wales, Yorkshire and the Humber and the north-west were the only regions to see prices rise from July levels in both the prime and prime platinum tiers.
Andrew Smith, research director at Primelocation.com, said: "Top-end vendors have continued to put their properties on the market and now that buyers have a healthy range of quality property to choose from, upward pressure on prices has eased in all but the most sought-after areas. This trend has been exaggerated as buyers put their search on hold over the summer and act with increased caution due to renewed fears of a downturn in the economy."