UK housing market defies August dip

House prices in the UK rose in August, buoyed by a 1.6% rise in the London market, and transactions increased by 1.5%, bucking the seasonal trend.

London prices moved ahead more sharply on the month rising 1.6% after three months of fall and, in each of the other nine regions, prices showed small positive movements, if only in slowing monthly falls.

Richard Sexton, business development director of e.surv commented:

"The property market bounced back this summer, with consecutive months of price rises following falls between April and June.

"While some regions have seen prices fall, the rate of fall has shrunk. The housing market across the country is moving in the right direction.

"Prices in London rose most, thanks to all the cash buyers pushing up demand. In London, there are more buyers with large deposits and they are less exposed to the squeeze on mortgages that is hitting first-time buyers so hard.

"Transactions also rose 1.5% which completely defies the classic summer slowdown. Transactions usually fall about 1.5% between July and August. 2011 looks significantly better than usual. People who already own property are driving these sales.

"Mortgage finance is very cheap at the moment – it’s just hard to get if you don’t have a hefty deposit. With major lenders like Santander cutting their mortgage rates by 1% this week, buyers who are able to put up at least a quarter of the value of their purchase can pick up bargains.
The fact that the properties are so reasonably priced is also helping allay lenders’ fears about borrowers’ ability to pay for their loans.

But first-timers with less money can’t get a mortgage easily and that’s obviously a major hurdle to getting a foot on the property ladder. The ratio of flat to detached house sales has changed radically. The number of flats sold has fallen almost twice as far from 2007 as detached homes.

While the large number of newly built flats that came onto the market in 2007 boosted transactions, this is largely the result of the slowing of the market for first-time buyers in the last four years and the limited availability of mortgage finance at higher LTVs.

The UK housing market is now not only fragmented by region, but also by property type, with owners of larger detached property holding much more equity since the credit crisis than those of more modest homes.”