Data from the Halifax shows house prices in the UK have decreased by 1.4% for the month to February although over the years prices remain 9.7% higher.
Martin Ellis, Halifax housing economist has said the house price rise remains robust with the quarterly rise to February 3.0% higher as there is a significant imbalance between supply and demand.
Over the year house prices are higher by 9.7% with the average house price now at £209,495.
Figures from the Nationwide show a 4.8% rise in house prices for the year to February and a slight increase of 0.3% over the month with an average house price of £196,930.
Rising house prices make it harder for first time buyers to purchase their first home as they need to find a larger deposit or have greater earnings for a mortgage.
In contrast remortgage buyers can benefit from higher house prices as they could release capital which they can use to improve their home.
Mortgage approvals up strongly
According to Nationwide’s Chief Economist Robert Gardner the number of mortgages approved in January 2016 has increased strongly to 74,600 up from 71,000 in December.
However, much of the increase is due buy-to-let investor demand to beat the new Stamp Duty Land Tax (SDLT) being introduced from April 2016. This will introduce an additional tax of 3% on the property value for anyone buying a buy-to-let or second home.
Mr Gardner has said the number of mortgage approvals is likely to reduce during the spring and summer months. Beyond this a buoyant labour market and low borrowing costs are likely to see an increase in the pace of market activity.
Martin Ellis of the Halifax says there is evidence to suggest the supply of homes is improving with more second hand homes available on the market in the last two months.
There has also been a significant increase in new-build properties up 20% in 2015 over the previous year with a 7% rise from quarter 3 to quarter 4.
Further ahead there are mortgage affordability issues as house price rise exceed expected growth in earnings curbing demand and easing house prices.
Even so for home movers the gap between the price of their existing and new home increases which means they need a larger mortgage.
Home ownership levels are stabilising
Data from the Nationwide show that the level of home ownership has been declining for the past twelve years in England.
Home ownership reached a peak of 70.9% in 2003 and in 2015 this had reduced to 63.6%.
The biggest decrease has been in the age group of 25-34 years old traditionally containing the largest number of first time buyers. This has reduced considerably from 57% in 2005 to only 37% in 2015.
Help for first time buyers can come from family members as the equity release mortgage buyer can access money and give their children or grandchildren the deposit for a property.
Not surprisingly the number of people renting privately, through a local authority or housing association has increased over this period from 43% to 63%.
The number of privately rented properties in the UK over the last ten years has increased by 75% to 4.3 million and represents 19% of all households.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
Learn more by using the property value tracker chart, mortgage monthly cost calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even give to a family member.
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