Shock pre-election surge in house prices
Wed 29 Apr 2015
The property market shrugged off pre-election jitters to jump 1% in April, according to Nationwide.
Experts say the housing market is now "a law unto itself" with prices rising despite the uncertain outcome of the forthcoming General Election and latest figures showing UK GDP growth is falling short of expectations.
The biggest monthly gain since June last year takes the average house price to 193,048.
Annual house price growth is running at 5.2%, up from 5.1% in March.
Jeremy Duncombe, director, Legal & General Mortgage Club, said: Although house price rises in recent months may seem subdued when compared to last year, they are still rising well above the level of inflation.
This is due to a surplus in demand which is outpacing the supply of new houses.
This imbalance in the housing market has pushed up the average asking price in April, making homeownership a more distant dream for many potential buyers.
Jonathan Hopper, managing director of Garrington Property Finders, said house price growth in the month before the election came as a surprise. "Demand was always there even though the property market had come off the boil over the past six to nine months.
"Fundamentals supporting the market are very strong right now. Mortgage rates are obscenely low, and may go even lower, inflation is at zero and the jobs market and economy are strengthening."
Jonathan Samuels, chief executive of Dragonfly Property Finance, said the 1% April price increase came out-of-the-blue and underlines the inherent volatility of the property market, which is now truly is a law unto itself.
But he said potential buyers were increasingly cautious. People are more aware than ever that the property market is a double-edged sword. And prices overall are high. Buying a property is not a decision that can be taken lightly.
"We would expect activity levels to pick up after the General Election, particularly at the higher end of the market, but 2015 as a whole is shaping up to be a middling year for the market. But is this necessarily a bad thing?"
New figures published today show a spike in first-time buyer sales over the last three months, accounting for 28% of all property purchases.
Peter Rollings, chief executive of Marsh & Parsons, which produced the figures, said first-time buyers have benefited from low mortgage rates and reduced stamp duty costs. Combined with a more accessible pace of property price growth so far in 2015, many more have been able to take the plunge into the property market.
Prime London property has always been a bastion of investment, but its encouraging to see the drawbridge being lowered for everyday Londoners who live and work in this city."
The figures also show that investors now make one in three property purchases in the capital.