Home Business House prices rise 0.7% in May 2014

House prices rise 0.7% in May 2014

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Photo: Nigel Holland

The average price of UK homes rose 0.7% in May 2014, slowing slightly from the 1.2% increase in April 2014, figures from Nationwide reveal.

Annual prices increased 11.1% in the year to May 2014 compared to from 10.9% in the year to April 2014.

The average house price has risen from £183,577 in April 2014 to £186,512 in May 2014, according to the data.

Key findings:

  • mortgage approvals in April 2014 were 17% below January’s high
  • 45% of Help to Buy mortgage guarantee loans were for properties costing £125,000 or less
  • first-time buyers accounted for 48% of house purchases in March 2014, a record high.

 

The findings suggest that Help to Buy may not be the main factor behind the recent boost in the market:

  • 12,853 new Help to Buy mortgages in Q1 2014, making up only 9% of total mortgages in the period
  • average house prices in London increased 18% in Q1 2014,almost twice the pace of the rest of the country
  • in Q1 2014 Help to Buy accounted for around 4% of total mortgages in London.

 

Nigel Holland from Holland & Co Chartered Accountants said:

“Some analysts have commented that the above figures show evidence of signs of a slowdown in the market. I personally believe that it is too early to say this. They could be right but it is too early to come to such a conclusion.

Recently there has been the introduction of the Mortgage Market Review (MMR) the MMR is a comprehensive review of the mortgage market, which started with a Discussion Paper in 2009 and culminated in a Policy Statement and final rules in October 2012.

The MMR set out the case for reforming the mortgage market to ensure it is sustainable and works better for consumers.

It had become clear by the height of the market in 2007, that, while the mortgage market had worked well for many people, it had been a cause of severe hardship for others. The regulatory framework in place at the time had proved to be ineffective in constraining particularly high-risk lending and borrowing. The MMR package of reforms is aimed at ensuring the continued access to mortgages for the great majority of customers who can afford it, while preventing a return to the poor practices that we saw in the past.

The implementation of the MMR could be part of the reason why the housing price rises have slowed down a fraction.”

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