House prices up as buyers return

For sale signsHouse prices are 5.4% higher than last summer as property market activity intensifies, figures from the Halifax showed today.

The lender said prices rose 0.4% in August, the seventh consecutive monthly increase, resulting in an average figure of £170,231.
Prices in the three months to August were 5.4% higher than in the same three months a year earlier, better than July's 4.6% increase and the highest annual rate since June 2010. The annual rate has picked up from 1.1% in March.

Halifax housing economist Martin Ellis said economic improvement and Government schemes have helped boosted demand, although activity is still being held back by the squeeze on household budgets.

"Overall, house prices are expected to rise gradually over the remainder of the year," he said.
Halifax's report follows similar findings from building society Nationwide last week that the housing market revival is gathering pace.

Lenders, surveyors, estate agents and property websites have all been reporting a strong pick-up in activity following the launch of Funding for Lending, which has prompted a big improvement in mortgage availability and rates.

Other initiatives such as NewBuy and Help to Buy have been aimed at giving people with smaller deposits a leg-up.

Bank of England governor Mark Carney recently addressed concerns that Government stimulus measures risk stoking another property bubble.

He said the Bank is ''acutely aware'' of the potential threats and said action will be taken to clamp down on mortgage lending if needed.

Matthew Pointon, property economist at consultancy Capital Economics, said the imbalance between demand and the supply of homes for sale is likely to subside gradually, which will reduce the upwards pressure on prices.

He added: "A short-term imbalance between housing demand and the number of homes on the market is driving price increases.

"But the rise in wholesale interest rates seen over the past few weeks may soon start to feed through to mortgage rates, dampening demand.

"And Mark Carney's promise to use new tools to prevent a house price boom may help convince first-time buyers that they don't have to rush to buy a home now.

"At the same time, improved selling conditions should boost the number of homes for sale, taking some of the heat out of the market."

The people who affect house prices
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House prices up as buyers return

They have the power to push a price higher, depending on how many other people are in the running for a home and how liberal they want to be with the truth to the buyers. In some cases, they can also do more harm than good by initially overvaluing a property. The worst case scenario is the home eventually sells for less than it would have done had it been priced realistically in the first place.

Sometimes a quick-moving solicitor can be the difference between getting the home at the price you want and getting into a bidding war or missing out entirely. If the buyer needs a quick sale, they're more likely to do a deal with someone who has a flexible solicitor who can push through the sale so it suits them.

Research by Halifax concluded that anti-social neighbours could take £31,000 off the price of an average home. If you’re selling, you should declare any problems you’ve had on a Seller’s Property Information Form, otherwise you could face a claim later on.

While an increase in Council Tax might not be too much of a deterrent to a potential buyer, plans to grant permission for new homes, a mobile phone mast or wind turbines could knock an asking price down. If you're a buyer, the local council should have details of any future planning applications and you can search them for a small fee.

A lot of traffic in an area obviously has an effect on air quality. Since 1997 each local authority in the UK has carried out studies of the air quality in its area. If an area falls below a national benchmark for air quality, it has to be declared an Air Quality Management Area (AQMA). Some residents of the Llandaff area of Cardiff expressed concern that it had become an AQMA due to an increase in traffic in the area. Whether this becomes a widespread issue remains to be seen.

Mortgage availability is a key driver of property prices. If no-one can take out a mortgage, then prices will stall and eventually fall. We've seen this happen in parts of the UK in recent years, as lenders tightened up their criteria following the credit crunch. Conversely, good mortgage availability will mean more people are competing for properties - to a seller's advantage if their home is desirable.

An outstanding local school can add around 8% to the value of a home, according to the Royal Institution of Chartered Surveyors. On the flipside, a not so good Ofsted report can take off a similar amount. If you’re concerned about a school’s performance, one way to get involved is to become a governor.

Initiatives such as the Help To Buy scheme have been credited with pushing house prices up. A buoyant economy with strong employment gives people the confidence to buy and leads to an upward shift in house prices, while rises in unemployment have the reverse effect. Planning restrictions, at both a national and local government level, affect the number of homes in a particular area.

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