However there are wide variations across England and Wales where there have been significant price changes
Despite flat prices, real values come under pressure – as RPI inflation stands at 5.5%
Seasonally adjusted transactions rose by 6% fuelled by the rush to beat the stamp duty increase on high-value properties
David Brown, commercial director of LSL Property Services, comments:
“Although prices are static, this doesn’t mean real property values are staying still. With RPI currently running at 5.5%, property owners are seeing value being chipped away at an alarming rate. This is great news for buyers who are able to secure finance.
"High inflation won’t last forever and the low rates fuelling inflation also mean it’s possible to secure good value fixed-rate mortgages. Buyers should bear in mind that currently, even though wages aren’t keeping pace with inflation, property values represent a smaller and smaller proportion of income.
“The static national figures conceal a much more dynamic picture in the regions, where prices are moving sharply in both directions. London and the South East continue to power forward, while the North of England and Wales have seen significant price falls.
"Lenders are especially worried about the effect government spending cuts will have on unemployment in areas where a large proportion of workers are employed by the state, and this is holding back demand. This disparity may be reduced to a small extent by the government’s FirstBuy scheme, but the scale of regional price variations shows it will take much more than the promised £250 million to invigorate regions where the biggest falls are happening.”
Richard Sexton, business development director of e.surv, says:
“The market is on shaky ground. Although lending is increasing slowly, that’s from a very low base. Concerns over inflation and the dynamism of the economic recovery will only serve to exacerbate lenders’ caution, as they worry about the state of borrower personal finances.
"Although approvals are rising, average LTV’s are creeping up, and more high LTV products are trickling onto the market, there are no signs of this becoming a flood. With mortgages still so difficult to secure it is little wonder that regional house prices are so volatile given the low level of transactions.
"London is a different beast. While prices has risen a healthy 3.7%, the rental market is in overdrive, showing a 7.7% increase in the cost of renting compared to this time last year. Potential owners feel there is more value in buying rather than renting and are more determined than ever to escape the clutches of the private rented sector.”
