UK house prices have risen by 3% in the first three months of 2012 according to a leading house price index.
The House Price Watch from Assetz puts the price of an average house in March at Â£202,017. This represents not only a 3% increase on the quarter but also a 0.8% rise on February and 1.2% over the last year.
Despite the obvious differences in methodologies and views of each individual index on the average house price in March (see table below), what we should really be looking at is the trend. Just about every index since early 2010 shows that the housing market is level.
There appears to be (for the moment anyway) a balance between supply and demand that is keeping house prices relatively stagnant. And, with government attempts to keep repossessions at bay as well as earmarking more taxpayers’ money for ‘social housing’ without increasing stock by any great amount, this looks likely to continue into the future.
As Stuart Law, the founder of Assetz, points out we not only have a ‘new’ reduced level of transactions at 50% of 2007 we also have a situation where the level of rental demand is high, boosting landlord ownership of housing. This may be keeping house prices higher than ordinary buyers can afford.
Commenting on the data Stuart Law, Chief Executive of Assetz, said “The year has got off to a strong start, with a 3% rise in average house prices in the first quarter as an average of all of the main indices. Whilst there were a number of factors driving the market upwards, such as a rush to complete purchases ahead of the stamp duty holiday being withdrawn, there were also a number of negative factors such as rising mortgage rates that failed to quell the rise in transactions. In fact, HMRC figures showed a large surge in completed sales in March, up 17% in a month, as house buying demand continued to grow.
“Mortgage lending was also up 30% month on month in February. Nonetheless we still have the ‘new normal’ level of transactions, only around half of those in 2007, and we have no expectation that transaction levels will reach those peaks again for many, many years as we move towards becoming a rental society in the UK.
“We feel that our estimate of a 3% rise in UK house prices for the whole year of 2012, which was at the top of the range of forecasts, could be comfortably achieved, regardless of the initial version of the GDP figures released today indicating that the economy is falling slightly again.
“The UK buy to let community is still one of the main beneficiaries of this double dip recession, with the overall depressed mortgage market driving the private rented sector onwards and upwards. We continue to see strong demand from both experienced and first time investors looking to buy in this strong market.”