The number of home sales exceeded 70,000 for the second month in a row, according to the latest LSL/Acadametrics England & Wales House Price Index.
David Newnes, director of LSL Property Services, said: “House prices soared to a new record high in August – the fourth record high so far this year. The property market has turned over a new leaf after years of restrained activity following the financial crisis.
“Prices are up £883 in the last month and are £7275 higher than a year ago due to a substantial boost in mortgage lending to first-time buyers. The UK’s economy is showing signs of sustained recovery which is pushing the housing market forward. Sales are rising rapidly; in May to August 2013 they have been higher than the equivalent period for the previous three years.
“The improving availability and pricing of mortgages is boosting demand for properties. Although prices are rising, competition among lenders has opened up the market for first-time buyers, with growing product choice and competitive rates.
“There has been a concerted effort by lenders to boost mortgage lending. The Government has been pivotal in providing the aid that the market has been craving for many years. The number of first time buyer mortgages is at the highest it has been in five years.
“The Funding for Lending Scheme has enabled banks to lend to a wider pool of borrowers thanks to cheaper funding, while the Help to Buy scheme is helping buyers overcome many hurdles such as high inflation and hefty deposit requirements. A vast number of aspiring homeowners have already signed up and many can finally afford to get on to the housing ladder.
“Higher loan-to-value (LTV) mortgages are much more readily available and at lower rates, which has been the catalyst behind the vast improvement in the housing market coupled with increasing consumer confidence. True, those with the largest deposits have access to the best rates, but overall they are falling and those with small deposits are able to grab cheap deals. LSL data shows that the average age of a first-time buyer is 30 and the average deposit is £30,109. First-time buyer activity, proving particularly strong in London, as well as the rest of the UK, has been crucial in opening up many housing chains and in helping boost house prices further up the ladder. The road to recovery is a long way off from the levels of activity seen before the financial crisis, but the rise in first-time buyer activity is sending positive waves of confidence.
“As expected, London is fuelling the significant rise in house prices on a national level. But signs suggest price growth is happening across the board. All ten regions in the country showed an increase in the annual rate of house price inflation compared to a month ago showing prices will climb across the whole of England and Wales. It is still too early to predict what impact the economy will have on prices, especially as the Bank’s Financial Policy Committee may apply downward pressure on prices through the controls over mortgage supply and pricing. Thus nothing can be set in stone yet. One thing is crystal clear: the market has become more fluid thanks to the increase in activity from the lower tier of the market.”
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