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Average house prices 5.5% below peak of 2008, as respected report contradicts recent bank figures showing price falls
The average house price in England and Wales edged up by 0.3% in August according to the latest LSL Property Services/Acadametrics house price index, however prices remained down by 2.2% year-on-year,
The annual price fall mirrors June's annual house price deflation figure of -2.2% – which was the largest year-on-year drop since last December and takes the price of an average home to £219,078. It means house prices are £12,751, or 5.5%, below the peak of £231,828 recorded in February 2008.
The monthly gain was boosted by a 1.6% rise in prices in London.
LSL estimated that the number of housing transactions would rise by 1.5% to 64,500 in August, "completely defying the classic summer slowdown", when transactions usually fall by 1.5% during the month.
David Newnes, director of LSL Property Services, said: "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. Mortgage finance is very cheap at the moment – it's just hard to get if you don't have a hefty deposit."
He added: "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."
Figures from surveying firm eSurv show that mortgage approvals rose from 49,239 in July to 49,566 in August – marking the biggest year-on-year rise since May 2010.
Buyers with a deposit of 15% or less accounted for more than 10% of total approvals in August, a high for this year but still well short of the 22% seen in August 2008. Purchase approvals with a high loan-to-value grew at almost twice the pace of the rest of the market in August.
Newnes said that first-time buyers with less money still can't get a mortgage easily, with the number of flats sold falling almost twice as far from 2007 highs as the number of detached homes.
"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."
Housing minister Grant Shapps sounded a note of warning this week, telling Bloomberg UK homeowners should not expect to make money from their property. "Gone are the days where you buy a house for capital appreciation. House prices can still go up, but they need to go up in line with or less than increases in average earnings for the long term," he said.
"We need a greater supply of homes in this country. We have an unacceptable situation where people cannot afford to have a roof over their head. People can't afford to buy the product because they can't get the mortgages. They can't get the mortgages because the multipliers are so high for how much they require compared with their salary. We need a long-term period of house-price stability in order to allow the majority of the population to afford homes again."
LSL's index is considered more robust than rivals as it uses the actual prices at which every property in England and Wales was sold, including those bought with cash, incorporating Land Registry data rather than valuation estimates or asking prices.
But its figures contradict recently published data from Halifax and Nationwide, which showed prices falling in August by a respective 1.2% and 0.6%.
Mark King
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