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| House price inflation up to highest level in three years | House price inflation up to highest level in three years |
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| The annual rate of house price inflation rose to its highest level in almost three years in June, as government schemes to stimulate the market and increased buyer confidence drove up demand for homes, according to the UK's largest mortgage lender. | The annual rate of house price inflation rose to its highest level in almost three years in June, as government schemes to stimulate the market and increased buyer confidence drove up demand for homes, according to the UK's largest mortgage lender. |
| Halifax's latest house price index showed that prices were up by 3.7% year-on-year, to an average of £167,984, the biggest annual increase since August 2010. | |
| The figures came as housebuilder Taylor Wimpey reported a busy spring following the introduction of the first part of the Help to Buy scheme, but warned the government needed a clear exit strategy for when the scheme came to an end. | |
| Halifax's annual figures, which unlike other indices are based on the average price over the quarter, not a straight month-on-month comparison, are above the lender's prediction that prices would not grow by more than 2% in 2013. | |
| It reported a 0.6% price rise in June, the fifth consecutive monthly increase, while the three-monthly change, which gives the smoothest sign of the way prices are heading, showed a 2.1% rise – the largest since January 2010. | |
| The bank's housing economist, Martin Ellis, said: "Improved confidence in both the housing market and the economy, combined with a shortage of properties available for sale, appear to be pushing up house prices." | The bank's housing economist, Martin Ellis, said: "Improved confidence in both the housing market and the economy, combined with a shortage of properties available for sale, appear to be pushing up house prices." |
| Ellis said there were signs the government's Funding for Lending Scheme launched in August 2012 and Help to Buy scheme, which opened in April, were also having an impact on demand. | |
| Housebuilder Taylor Wimpey said that it had so far reserved more than 1,000 properties for households using Help to Buy, which offers homebuyers a 20% interest-free loan from the government to let them raise a mortgage on a newbuild property. | |
| The firm said it had another 232 households going through the qualification process, but warned that there needed to be more clarity on what would happen at the end of Help to Buy. | |
| Taylor Wimpey's chief executive, Pete Redfern, told Reuters: "No industry should depend on those kind of measures long term … there needs to be an exit plan." He added: "The note of caution I'm sounding is that let's not assume this should be here forever. Let's have a plan that it should be here for two to three years and then sensibly withdrawn rather than taken away overnight." | |
| Redfern is not the first to make such comments – the Council of Mortgage Lenders has previously warned of the dangers of an abrupt end to Help the Buy, saying in May that "schemes which end in a cliff edge distort the market and tend to create a bubble on one side and a desert on the other". | |
| Funding for Lending, which was launched to provide cheap borrowing to banks and building societies that they could pass on through mortgages and loans to business, has led to a price war among lenders and some of the lowest interest rates on record. | Funding for Lending, which was launched to provide cheap borrowing to banks and building societies that they could pass on through mortgages and loans to business, has led to a price war among lenders and some of the lowest interest rates on record. |
| Although loans were originally targeted at borrowers with large deposits, in recent months there have been price cuts on larger loans, which may be encouraging buyers into the market. | Although loans were originally targeted at borrowers with large deposits, in recent months there have been price cuts on larger loans, which may be encouraging buyers into the market. |
| Figures from banks and building societies have shown an increase in borrowing, with the Bank of England reporting approvals for house purchases were at a three-and-a-half-year high. However, the number of homes up for sale has been falling, with surveyors saying the stock of unsold properties was down 5% year-on-year in May. | Figures from banks and building societies have shown an increase in borrowing, with the Bank of England reporting approvals for house purchases were at a three-and-a-half-year high. However, the number of homes up for sale has been falling, with surveyors saying the stock of unsold properties was down 5% year-on-year in May. |
| However, Ellis cautioned: "Despite these signs of improvement in the market, the still subdued economic background and weak income growth are expected to remain significant constraints on housing demand and activity during the second half of 2013." | However, Ellis cautioned: "Despite these signs of improvement in the market, the still subdued economic background and weak income growth are expected to remain significant constraints on housing demand and activity during the second half of 2013." |
| Matthew Pointon, property economist at Capital Economics, said he believed the upwards pressure on prices "is likely to fade somewhat" in the coming months as more homes came on to the market. | Matthew Pointon, property economist at Capital Economics, said he believed the upwards pressure on prices "is likely to fade somewhat" in the coming months as more homes came on to the market. |
| He added: "As mortgage rates have reached record lows, housing demand has, not surprisingly, picked up. And with the supply response so far rather muted, that has helped house prices to slowly, but steadily, trend-up since the start of the year. | |
| "But recent increases in wholesale interest rates suggest mortgage rates have reached a floor, and with more homes now being put up for sale a continued acceleration in prices is unlikely." | "But recent increases in wholesale interest rates suggest mortgage rates have reached a floor, and with more homes now being put up for sale a continued acceleration in prices is unlikely." |
| Top mortgages | Top mortgages |
| Chelsea Building Society | Chelsea Building Society |
| HSBC | HSBC |
| HSBC | HSBC |
| Provided by London & Country for the Guardian | Provided by London & Country for the Guardian |