House prices rise in June
05 August 2003
The housing market in London and the Southeast is showing signs of renewed activity as the market in general continues to show strength, according to the latest survey published today.
The Halifax has found that house prices across the UK grew by 1.3 per cent in July, taking the annual house price inflation to 19.2 per cent.
However, the UK's largest mortgage lender warns that the lowest number of first time buyers entering the market since 1974 will moderate demand in the market and cause house price growth to slow.
The survey found that Halifax estate agents reported an increase in the number of properties coming onto the London and South East mainstream market. However, the bank warned that the chronic shortage of new homes being built in the region would leave a shortage of dwellings of around 500,000 by 2021.
Martin Ellis, Chief Economist at the Halifax highlighted that whilst debt is at record levels, the cost of borrowing means that the average new borrower is spending 14 per cent of average gross earnings on mortgage payments, well below the average of 22 per cent since 1983.
He said , "Employment levels, the key driver of the UK housing market, remain good. Employment levels which increased by 101,000 in the three months ending in May, continue to underpin the housing market.
"Although the recent 25 basis point cut in bank base rates has helped to boost consumer confidence as well as supporting the manufacturing and retailing sector, it has not had a noticeable impact on transaction levels in the housing market."
The survey reflects the finding of the Nationwide's house price survey released last week. The Nationwide found that house prices grew by 1 per cent in July. The Building society also found the lowest levels of first time buyers entering the market for 20 years.