14-02-2014

House Prices Still Growing Says Halifax

Martin Ellis, housing economist for the Halifax, said: "With the supply of properties being slow to respond to more buoyant market conditions, stronger demand has resulted in continued upward pressure on house prices.

"Demand has increased against a background of low interest rates and higher consumer confidence underpinned by signs that the economy is recovering and unemployment falling faster than expected."

Ellis said demand was also being boosted by schemes like Help to Buy, which has been criticised in some quarters for fuelling a housing bubble. However, he said "continuing pressures on household finances, as earnings fail to keep pace with consumer price inflation, are expected to remain a constraint on the rate of growth of house prices".

Confidence among buyers is high with regards to their ability to get mortgage finance and their belief that house prices will continue to rise so they need to move sooner rather than later. Lenders were keen to offer loans ahead of the introduction of new rules in April, which will mean they have to carry out tougher affordability checks on applicants. With the Mortgage Market Review set to be introduced at the end of April, this will likely lead to a slowdown in lending as lenders get to grip with the changes they need to introduce. Lenders are therefore trying to get ahead of the game, so now is a good time to secure a competitive deal.

On Wednesday last week, the Halifax announced it had offered 1,000 mortgages through the second phase of the government's Help to Buy scheme since its launch in October.

It said eight in 10 of the 5,000 applications it had received so far were from outside London and the south-east, and a similar proportion were from first-time buyers.

HSBC's research on what it termed "property haves and have-nots" aged between 25 and 36 suggested that despite schemes like Help to Buy, those who were not yet homeowners were expecting to reach 35 before they were able to afford to buy.

At this stage those who were already on the ladder were likely to be trading up to a family home, it said. Those who had bought would be able to clear their mortgage by 60, while property have-nots would only pay it off at 67.

Of those who had bought, two-thirds had help from their parents, and the fact they would clear their mortgage at a younger age would allow them to help their children do the same later. "Thus creating a cycle where the children of today's property haves, become the property haves of tomorrow," the bank said.