Weak house price growth benefits first-time buyers
The UK’s largest building society reported that prices rose by 0.4% in April, taking annual price growth to 0.9%. It was the fifth straight month where annual growth has come to less than 1%.
As a result, Nationwide suggests the average house price now stands at £214,920.
Robert Gardner, chief economist at Nationwide, noted that while indicators of market activity, such as the number of property transactions and mortgage approvals, have been “broadly stable” in recent months, it appears that sentiment has softened.
He added: “While the number of properties coming onto the market has also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of supply and demand in favour of buyers in recent months.”
The new normal
Guy Harrington, chief executive of specialist lender Glenhawk, said that it was positive that first-time buyers were “wading back in” and picking up some good value stock.
He continued: “We need to end the perception, perpetuated by these reports, that the market is ‘weak’ and get used to stagnant house prices, not the rocket ship growth we have had in previous decades which was simply just not sustainable.”
Gareth Lewis, commercial director of MT Finance, suggested that it was hard to see the “suppressed growth” changing in the foreseeable future.
“However, the fact that there is any growth in values at all is encouraging, given what is going on in the wider political arena, and this level is more sustainable than the spikes we have seen previously, which have such an impact on affordability and people’s ability to buy,” he continued.
First-time buyers’ power
Andrew Montlake, director of Coreco, noted that first-time buyers were driving a significant chunk of the activity in the market, particularly if they were fortunate enough to get help from family members.
He added: “A combination of lower house prices, Help to Buy, fewer amateur landlords and more mortgage products at 90 per cent and 95 per cent loan to value (LTV) has created the perfect environment for people putting that first foot on the ladder.
“There’s also the small fact that a lot of first-time buyers are now looking at the property market and see that it’s often cheaper to buy than rent.”