Latest figures show that house prices rose to £161,677 whilst net mortgage lending by high street banks fell by £73 million and turned negative for the first time in fifteen years. This suggests that homeowners are rushing to pay off their mortgage rather than increase their borrowings - an indication that they are wary about their financial future and lack of confidence in the market.
Nick Barnes, head of Research at Chesterton Humberts, comments:
"This is a pretty unusual situation because we generally see a strong correlation between consumer confidence levels and average house price growth. This month however, we have seen the reverse, which suggests that even though households are understandably worried about their immediate financial future, confidence in a number of local housing markets has not evaporated entirely and is supporting house price growth."
Other key observations from the report include:
- The South West, Wales and the Midlands have delivered the highest residential total returns over a 10-year period at 8.2% p.a. outside of London
- Residential sales have risen by 10.5% as compared to the previous month – 5% higher than one year ago
- Average new build capital values rose by 48.9% between q1 2009 and q2 2012
Robert Bartlett, CEO of Chesterton Humberts adds:
"In spite of the positive indicators noted in the latest round of statistics, market conditions remain fragile and we are some way from seeing evidence of a sustained recovery. I do believe, however, that we may look back at this point in time and see that it marked the bottom of the cycle. With the combination of the Olympic Games, the summer holiday period and poor weather it is highly likely the market will remain in stasis until the autumn but thereafter we are hopeful of a pick-up, assuming no further shocks on the economic front."
