The number of mortgages approved in May surpassed economists’ expectations to become the highest number of approvals in three and a half years, at 58,242. Though still a fraction of pre-crisis highs, the figure – along with the seven-month high in the growth of consumer credit (credit granted for personal or household use) by £725m – shows that the lowered borrowing costs aided by the Funding for Lending Scheme (FLS) is continuing to help households onto the property ladder.
According to the Nationwide House Price Index for June, the increased demand has bolstered house prices, which recorded their highest (non-seasonally adjusted) annual rise of 1.9% since September 2010. According to the survey, the average UK house price now stands at £168,941; however, the London price is almost twice this amount (at £318,214).
This is an all-time high for the capital, which is the only region in the UK to have surpassed its pre-crisis levels as recorded in Q3 2007. Other regions in which house prices are performing well are, in order of their proximity to their 2007 levels:
- The outer metropolitan area (2% lower)
- East Anglia and the South East (6% lower)
- The South West (8% lower)
- The East Midlands (9% lower)
In the North of England, Wales, Scotland and Northern Ireland, prices continue to climb more slowly, remain static or even fall. The worst-performing region by far is Northern Ireland, in which average prices are less than half of their pre-crisis levels.
Despite increases in employment and the improved availability of mortgages, the supply of housing has not yet made significant increases to accommodate the burgeoning demand:
“Indeed, construction data point to a further decline in building activity in recent quarters from already depressed levels. For example, in Q1 2013 housing completions in England were down 8% compared to the same period of 2012 and around 40% below the average number of quarterly completions in 2007.”
Robert Gardner, Chief Economist at Nationwide.