National property prices increased 8.1% annually and 0.1% on the month to £204,216. This is the highest UK property price in two years. Graph 1 shows that property prices are still on the rise but at a steadier pace, as is clear from the steeper upward trend in the first six months of 2014.
The average first-time buyer property price is also on the rise – now standing at £155,743, up 7.3% annually and 0.7% on the month.
The number of new buyers coming to market has dropped slightly on an annual basis, 2.8%, and has also dipped by 4% on the month. The number of new first-time buyers has fallen by a marginal 0.3% annually. In contrast, supply of homes is on the up, by 7.3% annually and 2.6% on the month. We can now say that it is a buyer’s market with plenty of choice of stock. Buyers can also benefit from good mortgage deals given that interest rates are expected to remain steady until the beginning of 2014 at the earliest.
Even though supply of homes is on the up and demand is down, there has been no impact on property sales which are still strong – up 9.8% annually and 7.7% on the month. High demand for homes continues with almost 10 buyers chasing every property available for sale. This is a testament to the buoyancy of the current property market.
First-time buyers are now able to take out a mortgage on average of £121,681, which is an increase of 10% on last year. Average LTV now stands at 80.4%, up from 78.4%. This indicates that institutions are increasingly confident in lending to first-time-buyers.
Paul Smith, CEO of haart, comments:
“The second half of 2014 marks a shift in favour of buyers as healthy volumes of stock return to the market. Many homeowners are adopting a now or never attitude to take advantage of the continuing strength of the market having seen their equity rocket over the last year at a time when mortgage deals with decent loan-to-values are still available. Interest rates are to remain at historic lows until the start of 2015 at least and this is helping wider confidence.
“At the start of this year demand for homes was growing at a far greater rate than property supply but this trend has flipped and stock is coming to the market in healthy levels, up 7% annually, yet demand has fallen by almost 3% in the same period. There are now around 10 buyers chasing every property for sale, down from 14 at the start of this year. So the market is still competitive, but buyers now have more choice.
“As positive market sentiment continues this year, and people return from their summer sojourns, we fully expect a busy autumn with a higher volume of sales transactions.”
