House prices rose by 2.6% annually with cash buyers boosting sales, claims a new report. Meanwhile, house purchase loans in August fell, recording the third worst figures for the month in nearly two decades.
The LSL Property Services index which released the house price figures argues that their report contradicts recent Nationwide and Halifax figures which both recorded price falls because they have included cash sales which are not included in the other two surveys.
“The housing market demonstrated its resilience in August, as both house prices and sales activity rose, highlighting the underlying demand from buyers," said David Newnes, director of LSL Property Services.
“However, it’s not a homogenous picture across England and Wales. With wealthier investors playing a pivotal role in the national housing market, there is an increasing divide between the North and South. London, the South East and the South West are the key driving forces and are seeing the fastest rate of annual price growth. Even within cities, local markets are running at completely different paces. In London, for instance, Kensington and Chelsea is seeing five times the annual price growth of a less affluent borough such as Lewisham."
Indeed, latest figures from e.surv chartered surveyors show house purchase loans in August fell 8% year-on-year to 48,913, the third worst August for almost 20 years, thanks partly to a sharp fall in lending to borrowers with deposits of less than 15%.
“Much of the progress the mortgage market has made since summer 2011 has been unravelled by the double-dip recession," said Richard Sexton, business development director of e.surv. "Lending volumes, particularly to first time buyers, are slipping back towards the dismal levels we last saw in 2010 and early 2011. This is largely thanks to a fall in the number of high-loan-to-value mortgages banks are willing to grant.
The e.surv report also suggests that landlords are increasingly filling the vacuum left by first-time buyers at the bottom of the market. Despite overall purchase approvals falling 8% year-on-year, approvals on property worth less than 125,000 only fell by 4% as landlords aimed to take advantage to buy cheap property out of the reach of first-time buyers.
“With rents pushed up to record levels, landlords are piling in to cheap property," said Sexton. "Tight mortgage lending conditions are a virtuous circle for landlords and vicious one for first-time buyers. The fewer first-time buyers there are, the cheaper property becomes for landlords, and the more expensive rents get. We expect landlords to continue to represent a disproportionate share of the buying market in the medium term."