House prices continued their upward trajectory in April, partly driven by a big drop in the level of new borrower’s mortgage payments in relation to their income over the past six years, according to the Halifax.
Property prices rose by 1.1% in April, the bank said. This followed rises of 0.5% in February and 0.4% in March and contributed to a year-on-year price increase of 2%.
The lender, part of the Lloyds TSB group, partly put this down to the fact that typical mortgage payments for new borrowers - both first-time buyers and homemovers - have nearly halved as a proportion of disposable earnings from a peak of 48% in 2007 to 28% now.
This is significantly below the average of 36% recorded since 1984, according to the Halifax. “The relatively low level of mortgage payments in relation to income continues to provide support for the market,” the bank’s housing economist Martin Ellis said.
“Market activity, however, remains subdued by historical standards with the number of mortgage approvals for house purchases - a leading indicator of completed house sales - easing slightly in the first quarter of 2013.”
Ellis added: “Weak income growth and continuing below-trend economic growth are likely to remain significant constraints on housing demand during the remainder of 2013.”
The monthly figures are in contrast to those from Nationwide building society, which said house prices fell by 0.1% in April, the first fall in seven months. However, it did conclude that prices were up over the year, albeit by a more modest 0.9%.
The headline figures from both lenders show the stark regional differences in prices. March figures from the Land Registry showed a 0.1% rise for the month, but this masked a 2.5% rise in London compared to a 5.1% fall in Middlesbrough.
The latest Halifax figures do not give a regional breakdown. “For the country as a whole, the fourth consecutive rise in the annual rate of growth shows the market is once again beginning to fire,” said Jonathan Hopper, managing director at property search consultants Garrington.
Jonathan Harris, director of mortgage broker Anderson Harris, said he had not seen any slowdown in mortgage approvals this year. “Activity has been busier since the start of this year than at any time since the downturn, sending out the positive message that the situation is finally improving,” he said.
“It may take a while for this to feed through into the official numbers, but the signs are encouraging: more people feel they can get a mortgage as Funding for Lending pushes down the cost of funding.”