House Prices Rise Slightly In May
Published: 3 June 2010 By MoneyHighStreet Staff Leave a Comment
House prices continued their upward trend by rising by 0.5% in May, according to the latest monthly survey from the Nationwide building society.
House prices continued their upward trend by rising by 0.5% in May, according to the latest monthly survey from the Nationwide building society.
The house price inflation in May was lower than in April, which saw a 1% month on month increase, however at £169,162, the value of the average house is now £15,000 higher than this time last year.
House prices are currently rising at an annual rate of 9.8% and the price of the average home is now only £10,000 below the peak value in 2007, showing that the property market has recovered significantly from the low in February 2009.
It is a scarcity of properties for sale that is maintaining the gradual upwards trend in house prices, according to Martin Gahbauer, Nationwide’s Chief Economist.
“Housing market conditions remain characterised by thin transaction volumes and a relative scarcity of properties for sale, despite a slow return of more sellers in recent months,”, Gahbauer says.
It is too early to say whether the abolition of HIPs is having an affect on house prices, although there is some evidence to show that sellers are returning to the property market and concerns about increases in capital gains tax may be encouraging some landlords to market some of their portfolios.
The major inhibitor to activity within the property market remains the inability of purchasers to raise sufficient capital for a deposit. Many lenders are still demanding 75% loan to values, although there has been a welcome return to 90% LTVs by some mortgage lenders recently, particularly aimed at first time buyers.
A mortgage borrower has to find £42,290 for a 25% deposit to buy the average priced house or £16,916 to meet the requirements of a 90% LTV mortgage.
