House prices fell back slightly month-on-month with a 0.6 per cent dip recorded in June, marking the fourth monthly value fall seen since last December, according to the latest Halifax house price index.
However, despite the small blip, the average house price is still around £10,000 higher than those recorded at the end of 2013 and is up 8.8 per cent annually – the largest year-on-year increase seen in the index since October 2007.
A year ago, house prices were increasing annually at less than half the pace they are now, by 3.7 per cent. The average house price reached £183,462 in June compared to £167,668 seen at the same point last year.
Halifax said this measure has remained steady since June 2013, with quarterly increases ranging between two per cent and 2.3 per cent consistently recorded over the last year.
However, other market indicators have also begun to show signs of weakness. In reporting June prices today, Halifax cited HMRC data that confirmed house sales edged down by 3 per cent in May to below 100,000 for the first time in six months.
Sign the property rush is over? Buy to let tycoons sell up
Britain’s most famous buy-to-let landlords are selling their entire property portfolio of 1,000 homes in Ashford and Maidstone.
Fergus and Judith Wilson are to withdraw from the buy-to-let business and could net at least £100million.
Mr Wilson: ‘We are selling up the whole lot. The market has recovered and passed the 2007 level.’
Meanwhile, new buyer enquires fell for the sixth consecutive month in May which, if sustained, ‘could moderate further growth in demand’, Halifax said.
Stephen Noakes, mortgages director at Halifax, said: ‘Housing demand continues to be supported by an economic recovery that is gathering pace, with employment levels growing and rising consumer confidence, although real earnings growth remains sluggish.’
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘With estate agents reporting applicant levels are falling, fewer sealed bids and packed open houses, some moderation is returning to the market.
‘As more property comes up for sale, with vendors worrying that they may have missed the boat, the heat has come out of the housing market.’
Latest figures from HM Revenue and Customs show home sales dipped to under 100,000 in May for the first time in six months, although transactions were still up by 15 per cent compared with May 2013.
Last week, Nationwide Building Society reported in its house price study that values have surpassed their 2007 peak to stand at a new all-time average high of £188,903.
This has forced lenders to grill homebuyers and people looking to remortgage more about their spending habits, as part of the Mortgage Market Review laid out by the Financial Conduct Authority.
There have recently been signs that some of the strongest heat is being taken out of the housing market, following the introduction of toughened lending rules at the end of April.
Lenders also have to apply ‘stress tests’ to make sure applicants would still be able to afford their home loan repayments as and when interest rates rise.
Experts have said it is too soon to know whether the impact of these new rules will just be temporary, as they bed in.
Howard Archer, economist at IHS Global Insight, said: ‘Clearly the introduction of new regulations under the MMR has – at least temporarily – taken some of the steam out of housing market activity.
‘It is also probable that some of the recent slowdown in mortgage activity has been due to lenders getting to grips with the new MMR regulations and adapting their procedures, such as introducing more rigorous interviews with prospective borrowers and checking facts. This could make it a longer process to approve a mortgage.’
The Bank of England has also recently announced new curbs on riskier lending. It has said that loans of 4.5 times a borrower’s income or higher should account for no more than 15 per cent of new mortgages issued by lenders.
The Bank also said that lenders should ensure that borrowers can keep up their mortgage repayments in the event of a rise of up to three per cent in interest rates over the first five years of the loan.
Howard Archer added that a limited supply of homes on the market is still likely to be a significant factor which will push up prices in many areas – and he predicts rises of between six to seven per cent in 2015.http://www.dailymail.co.uk/money/mortgageshome/article-2685740/Tougher-lending-regulations-result-house-price-slowdown-June.html
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