House prices in the UK are on the rise but, in order for this run to continue, employment levels must progress in an upwards position. This is the conclusion to come out of the Halifax House Price Index, which revealed on Wednesday (March 6th) that in the three months to February property values were 1.9 per cent higher than in the previous three months.
Martin Ellis, housing economist, stated: "This was the third successive increase in this measure of the underlying trend. Prices were also 1.9 per cent higher than in the same period a year ago." This has been the result of increased demand, with house sales continuing to rise, albeit modestly.
According to Mr Ellis, these figures indicate a positive amount of market improvement, meaning conditions are moving into favourable ground for property investment. However, they are dependent on macroeconomic factors and the easing of unemployment levels. "The more than half a million increase in the number of people in employment over the past year is likely to have been a factor supporting housing demand," Mr Ellis said. "Weak income growth and continuing below-trend economic growth, however, are likely to remain significant constraints on housing demand."
These factors also inhibit lending and despite government schemes, banks and building societies are still not approving as many finance applications as hoped. Nonetheless, figures from e.surv offer hope that things are beginning to turn around. Mortgage approvals hit a four-year high in January, standing at 5,184 for the month. This is a 17 per cent increase on December levels and a 13 per cent rise year-on-year. High Loan to Value (LTV) was also up 30 per cent, meaning more and more first time buyers have been able to take those first tentative steps on the property ladder.
Between December 2012 and January 2013, lending to borrowers with a deposit of less than 15 per cent increased by 30 per cent, while one in eight house purchase loans went to LTV borrowers. This is the highest proportion in a year and is a result of greater competition in the market.
- Monday 11 March 2013