House prices rose by 1% in June, according to the Halifax, although in the three months up to June they were down 0.5% on the same period last year.
“House prices continue to fluctuate on a monthly basis with an even number of falls and rises over the past year,†said
Martin Ellis, Halifax housing economist. “There has been a marked improvement in the annual rate of change over the past 12 months. A year ago, in May 2011, house prices were falling at an annual rate of 4.2%. In contrast, there has been broad stability recently with the annual rate between 0% and – 0.5% in each of the past three months.â€
Ellis said that continuing low levels of mortgage payments relative to income and recent increases in employment may have helped support house prices in 2012 but added that he did not expect much change in prices and sales over the remainder of the year.
“Expect further house price growth to be weighted towards London and the South East, where a greater number of cash buyers and equity-rich are less dependent on the ongoing troubles of the mortgage market and are underpinning activity.â€
The Halifax’s figures also show that mortgage payments for new borrowers remain significantly below the long-term average as a proportion of disposable earnings. Typical mortgage payments for a new borrower – both first-time buyers and homemovers – at the long-term average loan to value ratio, were at 26% of disposable earnings in the period between April and June this year. This was well below the average of 36% recorded over the past 27 years. Mortgage payments have nearly halved as a proportion of income in recent years from a peak of 48% in 2007.
Peter Rollings, CEO of estate agent Marsh & Parsons, commented: “The limited supply of properties coming onto the market has helped house prices defy gravity, rather than a sudden loosening of the mortgage market. That said, a determined corps of first-time buyers seem to be adapting to the additional impediment of re-instated stamp duty tax, and those that have big enough savings to cover banks’ deposit requirements and the new tax are looking to exit the private rented sector rather than take a wait-and-see approach. Yet these first-timers actually able to buy represent a small minority amongst would-be buyers who are desperate to take advantage of historically affordable mortgages, a fact that is unlikely to change in the short-term unless the new funding for lending scheme is a success.â€
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