• Prices are £8,526 higher than one year ago
• £1,127 increase compared to a month ago
• House sales are 12% higher than last year
David Newnes, director of LSL Property Services plc, owner of Your Move and Reeds Rains estate agents, comments:
"2013 will be remembered as the year first-time buyers returned to the market. Up until this year the market was still in trouble thanks to the financial crisis. It was a long way from recovery. What a difference six months makes. In that time we've seen banks ease criteria on mortgages for people with small deposits, which has opened the door to new buyers who have spent years on the outside looking in. More people are in work. Inflation has begun to ease. And clearer forward guidance on interest rates has brought more certainty and confidence.
"The return of the first-time buyer has triggered a ripple of activity all the way up the housing ladder. It is starting to unclog the blockage at the bottom end of the market, which is helping make the whole system more fluid. Demand has increased significantly in a short space of time, and raced ahead of the supply of homes, which is causing house prices to rise. Think of it as shaking up a can of coke. When it is opened, you get the fizz, froth and overflow. Then it flattens out again. That's what we're seeing with the housing market. Demand has been bottled up by a lack of mortgage finance, but now mortgages have been made more accessible the backlog of buyers has spilled onto the market after years of frustration, scrimping and saving.
"But this is still only a fledgling recovery. First-time buyer numbers are still some way short of their historic levels. It is not a 'boom'. Or a 'bubble'. It is a market correction, albeit a fairly quick one. The only 'boom' is the loud noises coming from alarmists and sensationalists warning about a return to the bad old days of the 2000s. We're not even close to that. There is no sub-prime mortgage lending, no lending above 95% LTV. Credit checks are tough, rates are fairly high on high LTV mortgages, and lenders now carry out stringent affordability checks for every single mortgage.
"Plenty of would-be buyers in the North of the country are still struggling to get a mortgage and get on the housing ladder. The South East is dominating the market because it has more equity-rich buyers, with London the target for scores of foreign property investors. The improvements in the North are much less pronounced, and there is still plenty of room for improvement. Help to Buy is needed to make the market accessible to the many, not just the few. In the South East, buyers need the scheme because house prices are so high. In the north, house prices are much lower, but so are incomes and wage growth. The whole country will benefit from the scheme. It does, however, need to be complimented by more house building so supply keeps pace with demand, which will make house prices more affordable for future generations."