The UK housing market appears to be showing signs of improvement. According to data from property website Right move, asking prices have achieved new highs, rising for a fifth consecutive month to reach £249,841 during May. Average asking prices have surged by 9.1% over the year to date and 2013 has enjoyed the strongest start to a year since 2004. Meanwhile, average prices in London, the South East and East Anglia set new records – in fact, the average London price breached the half million mark, rising to £509,870.
Experts have hailed the news not only as a signal of renewed confidence among sellers, but also as evidence it is becoming less challenging for potential buyers to obtain a mortgage. The number of available mortgage deals has risen and lenders’ rates have become more attractive, supported by the government’s ‘Funding for Lending Scheme’. Even so,the number of properties for sale during the first five months of 2013 was 3% lower than during the same period last year, suggesting higher prices might also be the product of demand outstripping supply.
The Council of Mortgage Lenders (CML) has reported intensifying activity among first time buyers, commenting: “The market continues to be favourable for those looking to buy their first home.” The number of firsttime buyers increased by 20% during March as 19,100 loans were advanced to first time buyers during the month, compared with 15,900 during February. The CML also revealed a “gradual increase” in the proportion of first time buyers securing a mortgage with a deposit of 10% or less.
Mortgage lending to home movers rose at a monthly rate of 11% during March, while overall house purchase lending rose at a monthly rate of15% . According to the CML, borrowers are taking out a greater number of high loan to value mortgages than at any other time during the last four years. The organisation hailed the news as “a sign that lenders are open for business and that borrowers, even those without a large deposit, are increasingly able to get a foot on the property ladder”.
Elsewhere, mortgage lender Nationwide sounded a note of encouragement tempered with caution, highlighting “reasons for optimism that activity levels will continue to strengthen in the months ahead”, but warning that progress is likely to remain “gradual”, curbed by high unemployment, persistent inflationary pressures and sluggish wage growth, which are all expected to act as a drag on economic recovery.
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