Simon Read: Home prices soar but there's better news

The latest housing survey published by the Halifax on Thursday revealed the highest monthly jump in prices for almost seven years. The Halifax reported an increase in property prices of 2.6 per cent in May compared to April, the first rise for four months. The increase takes the price of an average British home to £158,565 and echoed Nationwide's rival survey published at the end of May that revealed a 1.2 per cent monthly price rise. But a jump in house prices does not mean it's time for homeowners to jump for joy. For starters the figures relate to just one month – and that kind of leap could simply be as a result of the pent-up demand from thousands of homebuyers who had delayed making a purchase.

For a better indication of the current state of the housing market, it's a good idea to look at the annual figure. While there has been some easing in the decline, house prices still dropped by 16.3 per cent in May. While that was the lowest level of decline since December, its only slightly more positive than April's 17.7 per cent annual decline. That means anyone now bandying around the 'recovery' word is getting a little ahead of themselves. As Howard Archer, economist at IHS Global Insight, points out:

"Sharply higher and rising unemployment, very low wage growth and an unwillingness of many people to commit to buying a house when they still have serious concerns about the outlook are all factors that are likely to continue to weigh down on the housing market for some time to come." In other words, homebuyers are still feeling a bit green, rather than embracing green shoots.

As the Halifax itself says: "House sales remain substantially below their long-term average, and market conditions are expected to remain difficult with housing activity continuing at low levels over the coming months." Backing up that view is the expectation that unemployment is set to rise further in the coming months and could yet climb to the three million mark. And with lenders still relatively negative about lending to first-time buyers, the ide that last month's increase could be the first steps of a bottoming out of the market look to be well off the mark.

In fact, there was better news for struggling homeowners elsewhere this week. The City Watchdog has announced plans to crack down on sale and rent-back schemes. These are the deals that the OFT described last year as having "the potential to cause serious harm to homeowners who are often already in a vulnerable position". Companies selling the schemes buy properties at a knock-down price but then allow the former owner to rent it back from them. They are often sold as a way out of financial difficulties without losing your home, but Citizens Advice has reported many cases of people losing money – and their homes – as the new owners have slung them out after a few months.

The schemes are to become regulated by the Financial Services Authority from 1 July, which should stop the unscrupulous cowboys making people homeless. However, the best advice for any homeowners having mortgage payment difficulties is to ignore the schemes and instead talk to their lender and get independent advice on their options.

s.read@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Sport
football This was Kane’s night, even if he played just a small part of it
Travel
travel Dreamland Margate, Britain’s oldest amusement park, is set to reopen
News
news
News
Founders James Brown and Tim Southwell with a mock-up of the first ever ‘Loaded’ magazine in 1994
media
News
Threlfall says: 'I am a guardian of the reality keys. I think I drive directors nuts'
people
Voices
voices The group has just unveiled a billion dollar plan to help nurse the British countryside back to health
News
The Westgate, a gay pub in the centre of Gloucester which played host to drag queens, has closed
news
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Recruitment Genius: Annuities / Pensions Administrator

    Negotiable: Recruitment Genius: You will be the first point of contact for all...

    Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

    £18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

    Ashdown Group: Learning and Development Programme Manager

    £35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

    Day In a Page

    The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

    The saffron censorship that governs India

    Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
    Prince Charles' 'black spider' letters to be published 'within weeks'

    Prince Charles' 'black spider' letters to be published 'within weeks'

    Supreme Court rules Dominic Grieve's ministerial veto was invalid
    Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

    How did fandom get so dark?

    Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
    The galaxy collisions that shed light on unseen parallel Universe

    The cosmic collisions that have shed light on unseen parallel Universe

    Dark matter study gives scientists insight into mystery of space
    The Swedes are adding a gender-neutral pronoun to their dictionary

    Swedes introduce gender-neutral pronoun

    Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
    Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

    Disney's mega money-making formula

    'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
    Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

    Lobster has gone mainstream

    Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
    Easter 2015: 14 best decorations

    14 best Easter decorations

    Get into the Easter spirit with our pick of accessories, ornaments and tableware
    Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

    Paul Scholes column

    Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
    Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

    The future of GM

    The greenhouses where Monsanto 'plays God' with the future of the planet
    Britain's mild winters could be numbered: why global warming is leaving UK chillier

    Britain's mild winters could be numbered

    Gulf Stream is slowing down faster than ever, scientists say
    Government gives £250,000 to Independent appeal

    Government gives £250,000 to Independent appeal

    Donation brings total raised by Homeless Veterans campaign to at least £1.25m
    Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

    The most borrowed book at Bank of England library? Oh dear

    The book's fifth edition is used for Edexcel exams
    Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

    Cowslips vs honeysuckle

    It's the hunt for UK’s favourite wildflower
    Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

    Did a botched blackmail attempt help Cyril Smith escape justice?

    A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss