Bank of England boost housing market as prices rise by 0.5% in January
Thursday 31 January 2013
The Bank of England’s pump-priming of the mortgage market fuelled some New Year cheer for homeowners today as Nationwide said average prices rose 0.5% in January.
The lender put the improvement down to the Bank’s Funding for Lending scheme easing funding conditions but warned that further momentum would also depend on an improving economy.
Chief economist Robert Gardner said: “Progress is likely to be relatively slow on that front if recent trends are any guide, with the UK economy shrinking for the fourth time in five quarters.”
Nationwide said conditions were improving gradually for first-time buyers although they still account for just 20,000 transactions a month, compared with the pre-crisis average of 32,000 a month. Nationwide also noted a trend towards borrowers lengthening the term of their mortgage, with 53% of mortgages over 25 years, up from 40% in 2007.
Despite much brighter spots like the capital, prices have been stagnant over 2012 and could take years to recover lost ground.
Moody’s Analytics economist Melanie Bowler said: “House prices likely won’t surpass 2007 levels before the end of the decade. London residential property prices will continue to buck the trend, though price rises in 2013 will remain below their longer-term average.”
Jonathan Samuels, boss of Dragonfly Property Finance, added: “Consumer confidence remains very tentative and while unemployment has fallen, the prospect of a triple-dip recession is keeping people on red alert.”
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