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House prices resume growth, says Land Registry


06-02-2015

 

Figures show 0.9% increase in April, as leading economist says housing market conditions risk another ‘boom’

Row of pretty terraced houses
The Land Registry data is based on repeat sales and does not include new-build homes. Photograph: Alamy

UK house prices are likely to surge over the next few months, an economist said on Monday, as the Land Registry reported a return to growth in April.

A 0.9% rise in house prices during the month followed a 0.8% dip in March, and took the average price of a home in England and Wales to £179,817. Despite the increase, the annual rate of growth fell to a 14-month low of 5.1%.

In a note put out before the latest figures, Steven Bell, chief economist at fund managers F&C Investments, said boom conditions had returned to the UK housing market.

Bell said he believed the Bank of England would prefer to wait until the end of the year to see the impact of the July budget before raising interest rates, but competition between mortgage lenders, as well as rising incomes and falling arrears, were all boosting the supply of home loans and prices.

“This will confront the Bank of England with a dilemma: whether to raise base rates early, introduce further ‘macro prudential’ measures, or risk yet another house price boom,” he said. “A strong housing market is both an indicator that financial conditions are too loose and a mechanism by which those loose conditions feed through into the rest of the economy.”

The Land Registry data, which is based on repeat sales so does not include new-build homes, showed large leaps in prices in several parts of the country. The biggest monthly price increase in April was in Yorkshire & the Humber, where prices increased 2.7% over the month to an average of £123,471.

In London prices rose by 2.3% to £474,544, and annual growth in the capital remained in double figures at 10.9%. There was also strong growth in the north-west of England, which registered a 2.1% rise during the month. Meanwhile, prices fell in Wales and the north-east of England, by 1.1% and 0.5% respectively.

The Land Registry’s latest transaction figures, which cover February, showed a 17% drop in sales volumes across all price brackets. The biggest drop was in sales of homes costing £2m and more, which faced a mansion tax if Labour had won May’s general election. In this price bracket the number of sales was down by 30% year-on-year at 146.

Howard Archer, chief UK economist at IHS Global Insight, increased his forecast for growth in 2015 from 5% to 6% “partly due to the increased upward impact on prices coming from a lack of properties on the market”.

He added: “We also suspect that the housing market will benefit from reduced uncertainty following the decisive general election result.”

www.theguardian.com

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