House prices rise at a 'robust rate', says Halifax
House price went up by 9.7% in the year to February and were 3% higher in the three months to February than in the previous three months, according to new data from Halifax.
Its House Price Index – which put the average price of a house in the UK at £209,495 – also found that house prices fell by 1.4% between January and February.
Martin Ellis, Halifax housing economist, says: “Prices continue to rise at a robust pace, driven by a significant imbalance between supply and demand. While this position is likely to continue over the coming months, there are some tentative signs that the supply situation may be beginning to improve.
“Instructions for secondhand properties coming up for sale have increased in the past two months and the level of house building increased significantly in 2015. Further ahead, increasing affordability issues, as house price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease.”
House prices up 4.8%, says Nationwide
Nationwide’s research, also out today, reveals a more modest annual house price rise of 4.8% and an average house price of £196,930.
The building society, which gives monthly rather than quarterly figures, reports a monthly rise of 0.3% between January and February 2016.
Robert Gardner, Nationwide's chief economist, says: “Annual house price growth has remained in a fairly narrow range between 3% and 5% since the summer of 2015. This trend was also maintained in February, with house prices up 4.8% over the year, a slight pick-up from the 4.4% increase recorded in January.
“The number of mortgages approved for house purchase increased sharply in January to almost 75,000, up from around 71,000 approvals in December and the highest number since January 2014.
“However, much of the increase is likely to be related to the impending increase in stamp duty on second homes, which is due to take effect in April 2016. This is likely to have brought forward a significant number of purchases, which in turn will probably result in a fall back in approvals during the spring/summer.”
Race to exchange buy-to-let properties
Russell Quirk, founder and chief executive of eMoov.co.uk, agrees that the race to exchange before stamp duty rises for buy-to-let landlords and second-home owners has had an impact on the housing market.
“Demand is always an influential factor where an increase in house prices is concerned, so the impending stamp duty changes due in April have no doubt helped to keep the UK market buoyant.
“There has been a flurry of buyers keen to secure that second home or buy-to-let investment before the April deadline, as well as an increase in the stock available, due to savvy buyers looking to cash in and obtain a higher price than usual during this period of high demand. We expect once the stamp duty dust has settled the market will cool slightly.”
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.
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.