Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, comments:
“It’s taken almost five years, but the housing market finally looks set on the road to recovery from the 2008 downturn. The average house price is up £5,664 over the past year, and up £364 on a monthly basis. House prices have never been higher. They reached a record high in May and set another record in June. The catalyst has been a significant improvement in mortgage availability which is thawing the frozen first - time buyer market.
"Lenders are more willing to lend to high LTV borrowers, and this spate of activity at the bottom end of the market is reverberating all the way up the housing chain. The plethora of attractive mortgage deals on offer is working wonders and wider pools of buyers are flocking to the market.
“Let’s be clear though, the market still has a long way to go before it reaches its pre - 2008 health. Sales figures for June 2013 are below the level of the previous three years, and first - time buyer numbers are still low outside of the South East. Obtaining mortgage finance is still difficult by historic standards, and the shortage of properties on the market is a key stumbling block to a more sustained climb in transactions.
"There needs to be continued confidence in the property market’s bounce back to persuade more people to trade up and put their home on the market. The lack of supply is helping to boost prices but in the process making it more difficult for first - time buyers. The market needs an increase in supply to ensure price s don't rise out of equilibrium.
“Although house prices may have risen significantly in June 2013, the reality is that the annual growth of 2.5% is being driven by London. Figures are slightly misleading, reflecting the influx of foreign buyers who are boo sting property price growth in the capital.
"Money is pouring into prime areas from cash buyers and international investors looking to store their wealth in bricks and mortar. This growing demand for properties in central London areas is proving to be an im
portant contributor to the 7.9% growth in average prices in London.
“The Government must further support first - time buyers in order to close the gap between opposite ends of the property market. With economic conditions improving and consumer confidence rising, there are strong hopes that both the Funding for Lending and Help to Buy schemes will encourage more buyers and sellers to return to the market, which will support prices and may lead to long term recovery.”
Dr Peter Williams, housing market specialist and Chairman of Acadametrics, comments:
"The average house price in England & Wales in June is £364 (0.2%)higher than in May. It now stands at £232,801, which for the second month in succession sets a new record level, exceeding the previous peak reached in February 2008 at the height of the last housing boom. On a monthly basis prices have increased or remained constant in 18 of the last 19 months.
"Only in August 2012 was there a fall in average house prices, during the London Olympics, when many were distracted from the purchase of a family home. Prices have been rising over the last year on a near straight - line basis, with only August 2012 and February 2013 bucking this trend. In the other ten months prices have been increasing in a tight band of between 0.0% - 0.4% per month, with this month’s increase of 0.2% being in the centre of that range.
"On an annual basis the average house price has increased by 2.5% since last June. This level of house price inflation is below that of the ONS annual RPI Index for May 2013 of 3.1%, so in real terms house prices have fallen over the last 12 months. As we go on to show, the optimism that might be derived from the generally upward trend in prices is somewhat dampened by the knowledge that outside of London the picture of recovery and return to growth is more mixed.
"However, the main house price indices are now all pointing towards continued house price inflation and a slow but steady improvement of housing markets across England and Wales. This mimics the generally more confident views of the economy that have emerged in recent months. Mortgage lending has been boosted by a range of government initiatives, and we are finally seeing house builders moving to increase output.
"The Quarter 2 Credit Conditions Survey from the Bank of England was clearly more upbeat. It noted that in the 3 months to the end of May there was an increase in the availability of secured credit to households, with lenders expanding activity to support their ma rket shares as well as adjusting their risk appetite upwards. This last point is quite significant, and is reflected in increased numbers of higher loan - to - value products appearing on the market.
"Looking forward, the Bank noted that there was an ‘increase in loan approvals in 2013 Q2, the first time a positive balance has been recorded since 2011 Q3’ and that this ‘expansion of availability for secured credit was expected to continue, across loan - to - value (LTV) ratios, in 2013 Q3 ’.
"This is encouraging. At the same time, recent industry reports on the housing market produced by both the RICS and the Intermediary Mortgage Lenders Association raise real concerns about the future shape and direction of housing policy and the housing market, with both bodies calling for more dialogue with the government.
"There is a general view that the short term outlook is quite promising but that in the medium term, as government initiatives fall away, market uncertainty will return. The big question will be how much of the momentum currently being built up will be sustained. If buyers and sellers continue to return in numbers to the market, supported by rising prices and more credit, then the greater the likelihood this forward momentum can be
sustained. Time will tell!
"Based on statistics from the last eighteen years, transactions in June are on average 8% higher than in May. There is a bias towards the summer months in the purchase of homes, with June being typically the third highest month in the yearin terms of monthly housing transactions, following July and August. However, this year we estimate that June transactions will be 19% lower than May. So why are transaction numbers this June significantly lower than the previous month?
"We can perhaps answer this question by pointing out that May transactions in 2013 were higher than normal, by approximately 10,000 sales. Last month we stated that “... it will be interesting to observe the housing transaction figures in June to see if the increase in transactions in May 2013 is a one - off occurrence or the start of a sustained recovery in the market”. We now have the answer – it was a one - off. The jump in activity was probably due to there being five Fridays in the month of May, with the last day of the month being a Friday.
"Solicitors and their clients tend to exchange housing contracts on a Friday, to allow the purchaser to move into their new home over a weekend. There is also a tendency for solicitors to complete housing transactions by the last day of the month, to allow mortgage interest calculations to coincide with the start of the new month.
"The fact that this year the last day of May was a Friday will have resulted in higher than average housing completions in the month. Given historically low levels of transactions and very modest price increases, market statistics are even more exposed to these ‘micro’ factors than normal.
"If we combine our estimates of sales for both May and June 2013, we calculate there will have been 115,000 transactions over the two months; this compares with 113,486 transactions for the same period in 2012, an increase of 1.3%. Overall we estimate there have been 310,800 transactions in the first six months of 2013, compared to 308,936 transactions during the first six months of 2012, an increase of 0.6%."
