House prices hit all-time peak, deterring first-time buyers

House prices hit all-time peak, deterring first-time buyers

LONDON - House prices in England and Wales reached an all-time peak in July, driven by strong demand in London, though purchases by first-time buyers remain well below historic levels, a report showed on Friday.

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LONDON | Fri Aug 9, 2013 9:57am BST

(Reuters) - House prices in England and Wales reached an all-time peak in July, driven by strong demand in London, though purchases by first-time buyers remain well below historic levels, a report showed on Friday.
House prices rose 0.3 percent in July to a record 232,969 pounds in July, bolstered by a government housing scheme to subsidise purchases, according to the report by LSL Property Services and economics consultancy Acadametrics.

 

Business Secretary Vince Cable has warned the scheme to help homebuyers could just fuel a house price bubble.

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David Brown, commercial director of LSL Property Services, said low housing stock was inflating prices and first-time buys were running at half of normal levels.
LSL said that since July last year, house prices have risen 2.6 percent, the biggest year-on-year rise since April. But London price are rising much faster, by 7.1 percent annually.
The LSL/Acadametrics index is based on Land Registry data on completed house purchases, adjusted for the type of property sold and the time of year.
It is less timely but covers a wider range of purchases than the closely watched indexes published by mortgage lenders Nationwide and Halifax, which both show prices rising by around 4 percent, their fastest annual rate in about three years.
"Supply is restrained, and without a sudden rush of properties hitting the market, prices will rise even more over coming months. The bottom line is that the divide between London and the rest of the UK housing market is deepening," Brown said.
While many economists have warned that incentives for house purchase announced by finance minister George Osborne in his March budget may fuel a property bubble, on Wednesday Bank of England Governor Mark Carney played down these fears.
Mortgage applications are below average and the proportion of high loan-to-value housing loans was well below pre-crisis levels, he said.
(Reporting by Max de Haldevang; Editing by Ruth Pitchford)
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