Prices in England and Wales
A report by eSurv has shown an annual 3% increase in the average price of properties throughout the UK. House prices have risen steadily over that last year but fell slightly in June; this was however the first drop in seven months. With a shortage in the housing market, together with a strong confidence from buyers who have large enough deposits to purchase higher value properties is generally helping to support prices.
The highest tier of the housing market is still the main reason influencing the price rises. With wealthy investors are putting in capital to high-end properties as they look to protect their assets.
This energy at the higher levels of the market has seen London pull away from the rest of England and Wales. House prices across ten boroughs of London now at record highs. Average house prices in London are now £185,000 above the national average.
In contrast to the rise in property prices, actual property purchases reached a low in June with 57,000 estimated property transactions. However this is not regarded as a sudden decline in the housing market, rather that outside factors have had an impact such as the record rainfall and the Diamond Jubilee having an impact on purchasing activity.
There is however still a long term issue that is having an effect on the amount of property purchases and that is a lack of available mortgage finance to those investors who do not have substantial deposits and this will be a major factor in the future of the property market.
Property buyers are still looking to invest with affordable mortgage rates, and should the Funding for Lending scheme by the Bank of England be successful then there could be an increase in activity by mortgage lenders allowing first-time buyers to get on the property ladder.
Prices in Scotland
Scotland has a housing market is currently doing well despite less mortgage approvals and an economy that is struggling. Thus far 2012 has seen an 11% increase in property sales compared to the same time last year, showing that the property market is heading albeit slowly towards a continued recovery.
May has seen an optimistic increase in the number of first time buyers with more and more first time buyers shunning high rental costs and saving for larger deposits for their mortgage. There is still however a large reliance on the more wealthy investors and landlords when it comes to the overall level of sales.
May also saw the average price paid for a property in Scotland fall by 0.1% which equates to £195. During the past twelve months, prices have fallen for six months, risen for five months and one month of no change. Overall property prices are 0.6% lower than the same time last year.
The biggest obstacle at the moment stopping a full recovery in the property market is the availability of mortgages. The banking sector is in disarray and there is uneasiness about lending to those first time buyers with small deposits.
Since 2008, banks are on average asking for deposits that are double what they were before 2008. Such high deposits are a major obstacle for the first time buyer and overall recovery of the property market. With the banks worried about the EuroZone crisis, they are trying to strengthen their balance sheets, rather than approve mortgages for first time buyers.
Across Scotland buyers would be wise to check local property prices, for instance property prices have fallen in both Aberdeen and Glasgow, whereas Edinburgh and Dundee saw a significant increase in property prices. Going forward prices at a local level will be impacted by how well the local economy adapts to slowing growth.