House price boost in May points to a market recovery
House prices rose by 0.4% in May 2013, taking the average price of a UK home to £167,912, according to Nationwide Building Society.
Its latest house price index shows that prices rose by 1.1% in the year to May – the fastest annual rate of growth since November 2011. But housing experts greeted the news with caution.
Robert Gardner, Nationwide's Chief Economist, said the boost in home values was due mainly to wider availability of cheap mortgages, helped by the government's Funding for Lending scheme. He said the figures offered, "further support for the view that the housing market is gradually gaining momentum."
But housing expert Henry Pryor argued: "Prices may be creeping higher in parts of the country as Funding for Lending and the government's Help to Buy initiative inflate what many fear is the next bubble. But in other parts of the country ‘deal prices' (the price people are actually trading at) are static at best.
"Don't be fooled - despite there being nearly 800,000 homes for sale across the UK, last month just 72,000 sold. The Nationwide figures this morning confirm that there is a market although the strength varies from parish to parish. Buyers remain cautious and estate agents are having to work hard to get deals done."
Buying agent Kate Faulkner added: "Although this rise is potentially good news for homeowners and helps to build confidence back into the buying/selling market, we still have to wait until the summer months to see if this positive trend will be maintained. We all need to remember that transactions are still at an all-time low."
According to Nationwide, there has not been a monthly house price fall since September 2012 (on a seasonally-adjusted basis). The three-month on three-month figure, which offer a smoother picture of trends in the market, was in positive territory for the eighth month running, with a rise of 0.4%.
Howard Archer, chief economist at HIS Global Insight, said the May figures "are fully consistent with our view that house prices are likely to achieve a moderate gain of a few per cent or so over 2013, as activity gradually picks up."
But he believes a "firmer recovery" in the housing market will not take place until 2014, when the Help to Buy scheme properly filters through.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.