Transactions and house prices climb as wealthy buyers drive market
House prices increased by 3.2% on a yearly basis, climbing 0.2% compared to June, according to LSL Acadametrics.
Housing transactions numbered around 65,000 in July, a rise of 11% compared to June which was a slow month due to bank holidays and the Diamond Jubilee.
David Brown, commercial director of LSL Property Services, comments: “The housing market remains a long way away from the heights it hit before the crunch, but both prices and transactions defied the wider economic gloom in July.
“Sales activity bounced back following the disruption of the additional Jubilee bank holiday in June, with the monthly rise in transactions twice the normal seasonal increase.
“While the shortage of properties on the market remains a stumbling block to a more sustained climb in transactions, it is playing a pivotal role in supporting prices in many parts of the country, boosting competition among those buyers who have been able to secure finance.
“However, much of the buyer activity is being driven by the top end of the market rather than the bottom. First-time buyers are bearing the brunt of lenders’ caution and the need for larger deposits, and their numbers remain noticeably subdued.
“Banks and building societies are targeting those with sizeable deposits or equity, and it is wealthier borrowers – alongside cash buyers – that are contributing towards the ongoing resilience of the housing market.
“Unlocking the lower tier of the housing market remains key to seeing volume recovery and much rests on the success of the Funding for Lending Scheme and traction of the NewBuy initiative.
“There is by no means a consistent picture across the country. While the average national price has climbed, less prosperous areas such as Hartlepool have seen prices fall by 8.3% in the last 12 months, reflecting lenders’ caution in areas with weaker local economies where higher levels of unemployment may threaten borrowers’ finances.
“In contrast, London’s market is going from strength to strength. House prices in 10 London boroughs have hit new highs, with Kensington & Chelsea seeing capital gains of 38% since last June.
“While the figures may be flattered by comparison to last year’s hangover after the introduction of stamp duty in April on properties worth more than £1m, money is pouring into prime areas from cash buyers and international investors looking to store their wealth in bricks and mortar.
“As demand from wealthy buyers continues and first-time buyer numbers remain subdued, the gap between the opposite ends of the market remains.”