House prices see annual growth for first time since April 2011

House prices see annual growth for first time since April 2011

The LSL Property Services/Academetrics House Price Index for May has been released today.  It shows that house prices in England and Wales rose on an annual basis for the first time in 13 months in May, with a monthly increase of 0.5%.  The average house price is £223,207.
May saw positive movement in nine of the ten regions in England and Wales, with only Yorkshire and the Humber showing a further decrease in prices.  Three regions saw actual price growth, and the remaining six regions saw price falls, but at a smaller rate than previously.  An example of this is the North, where prices fell by 0.5% p.a. in May, which compares to a fall of 7% p.a. in September 2011.   
It is estimated that there were around 60,000 property transactions in May, which represents 67% of the long term average for May.  
David Brown, commercial director of LSL Property Services comments:
“It’s certainly not a consistent picture around the country, but the return to growth to the property market on an annual basis shows the market is beginning to stabilise.  The rush to complete high-value transactions before 2011’s closing of the stamp duty window meant annual growth figures in the early part of this year weren’t necessarily reflecting the progress being made in the property market.  A measured response to the growing and still uncertain eurozone crisis from mortgage lenders, along with ongoing strong demand from those able to save up large enough deposits to make purchases, has supported prices despite the tough external conditions which are buffeting the market.
“The regional picture is still varied, with Yorkshire and Humberside seeing prices fall -2.3% on the year while London’s prices grew 2.4%.  This demonstrates the fundamental differences in the economic situations of different regions in England & Wales and that lenders are treading with caution in areas where high unemployment is a threat to borrowers’ finances.
“The return of transactions to around 60,000 per month shows that the peak and trough effect of the first-time buyer stamp duty holiday seems to be stabilising and that the return of the levy for properties valued below £250,000 hasn’t produced a sustained slump in demand.  This is in part a result of the limited supply of housing stock at the lower end of the market, but also demonstrates buyers are anxious to escape the private rental sector as soon as they can put together the funds.  But the frustration remains that had the holiday been extended even more buyers could have had access to the market to support property values.”  
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