Housing Market Cools But More Needs To Be Done To Assist Buyers
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Housing Market Cools, But More Support Needed for Buyers
Summary
In April, house price inflation slowed considerably to 0.1%, a sharp decline from March's 1.1%. The annual house price increase also dropped to 4.8% in April, down from 5.3% in March, with the average UK house price rising by £1,490 to £163,573. This marks an increase of nearly £7,500 compared to the previous year, translating to an average price hike of over £20 per day over the last twelve months.
Market Overview
Fionnuala Earley, Group Economist at Nationwide, noted that the cooling of prices in April was expected after March's spike, underscoring the importance of not focusing too heavily on short-term data. Despite a decline in house purchase approvals from 121,000 to 115,000 in February, the overall demand remains robust, exceeding the ten-year average of about 100,000 per month.
Financial Concerns
While this trend reflects a stabilizing market, rising house prices have led to a significant mortgage debt, crossing the trillion-pound mark. Deirdre Hutton, Chairman of the National Consumer Council, cautioned that even a slight increase in interest rates could lead many families into financial distress.
Challenges for First-Time Buyers
Bradford & Bingley highlighted the difficulties faced by first-time buyers, noting that around 40% receive financial help from parents. Of those, half contribute significantly to the initial deposit, with 15% assisting with monthly mortgage repayments and 10% co-signing mortgages.
Need for Change in Lending
Richard Brown, CEO of Moneynet, emphasized the need for more flexible lending policies. Many people are moving away from traditional employment structures, necessitating innovative lending approaches. If rigid criteria persist, it could stifle market growth. Brown urged mortgage lenders to adapt to these changes to sustain the housing market's momentum.
Innovative Mortgage Solutions
Major lenders like Barclays are responding with tailored mortgage products for first-time buyers, offering options such as cashback, lifetime trackers, and fixed rates, along with discounts on household purchases. These initiatives are crucial in helping buyers enter the market, although a period of market stability is desirable to boost buyer confidence.
Future Outlook
Fionnuala Earley anticipates continued monthly fluctuations in house prices as the market adjusts to new economic conditions. While interest rates are expected to remain stable, other economic factors will influence disposable income and consumer confidence.
Disclaimer: This article is for informational purposes only and should not be considered financial advice under the Financial Services Act 1986. Seek professional advice before entering into any binding agreements.
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