Welsh house prices rise over last 12 months

WELSH house prices have beaten expectations and increased for the first time in almost a year.

In the past seven months the nation’s house prices have gone up by an average of £1,563. The average house price in Wales is now £157,779.

A flood of first-time buyers coming into the market is credited with driving the spike.

But experts have warned that the rally could lose steam if more houses are not built soon.

“The market will hit a roadblock if the lack of housing supply in Wales is not addressed,” said chartered surveyor Richard Sexton.

Average September house prices went up 0.5% on the same period a year earlier – the first such increase since February.

Stronger than expected economic growth is also credited with lifting house prices.

“The economy is racing along and the rise in confidence, underpinned by better access to mortgages, is fuelling the property market in Wales,” said Mr Sexton.

Alongside robust growth figures, the Westminster Government’s New Buy mortgage guarantee scheme is expected to propel the Welsh housing market further into the black.

House prices rise in every region of England

House prices in every region of England rose in September, according to official data published on Monday which reignited the debate about the prospects of a new house price bubble.

The Land Registry data showed that even before the government accelerated the second phase of its Help to Buy mortgage guarantee scheme, prices had increased 3.4% in a year on average, and were higher than in September 2012 in all English regions. However, prices in Wales were down by 1.7% year on year and fell by 0.4% in September.

Howard Archer, chief UK economist at IHS Global Insight, said: "There is a mounting danger that house prices could really take off over the coming months, especially if already significantly improving housing  market activity and rising buyer interest is lifted appreciably further by the Help to Buy mortgage guarantee scheme, which will take full effect in January."

Overall house prices in England and Wales continued to rise in September, increasing by 1.5% over the month to an average of £167,063, according to the Land Registry. This remained below the peak reached in November 2007, when average prices hit £181,839. There was also a jump in the number of homes sold for more than £1m.

The data, which does not include newbuild homes or those which have not changed hands since 1995 – but unlike other indices does include cash sales – covers the period before the launch of the second part of the government's controversial Help to Buy scheme earlier this month. The scheme gives a taxpayer-backed guarantee to lenders offering 95% mortgages that are open to first-time buyers and home movers on newbuild homes worth up to £600,000. Critics have argued it will further fuel an already rising market.

UK's 10 most and least affordable rural areas

Here are the 10 most affordable rural local authority districts according to Halifax's findings, with the average house price and the house price to annual local earnings ratio:

1. Copeland, North West, £ 100,791, 2.7

2. Stirling, Scotland, £ 149,838, 3.4

3. East Ayrshire, Scotland, £ 100,382, 3.5

4. Western Isles, Scotland, £ 102,592, 3.7

5. Pendle, North West, £ 101,296, 3.9

6. North Lincolnshire, Yorkshire and the Humber, £ 125,276, 4.0

7. Shetland Islands, Scotland, £ 140,610, 4.3

8. West Lindsey, East Midlands, £ 135,343, 4.4

9. Selby, Yorkshire and the Humber, £ 158,055, 4.4

10. Allerdale, North West, £ 133,364, 4.4

Here are the 10 least affordable rural local authority districts according to Halifax's findings, with the average house price and the house price to annual local earnings ratio:

1. Cotswolds, West Midlands, £ 318,128, 9.4

2. Torridge, South West, £201,076, 8.2

3. North Dorset, South West £215,906, 8.0

4. Chiltern, South East, £407,012, 7.6

5. East Devon, South West, £213,677, 7.5

6. Vale of White Horse, South East, £288,522, 7.4

7. Teignbridge, South West, £202,566, 7.4

8. North Devon, South West, £194,000, 7.4

9. East Dorset, South West, £281,760, 7.3

10. East Hampshire, South East, £291,990, 7.3

Rural retreat still costs £24,000 more than city home

The recent wave of first-time buyers into Britain's property market is helping to close the house price gap between urban and rural properties, a study has suggested.

But people buying a home in a rural retreat still pay nearly £24,000 more typically than those purchasing a property in a city, Halifax found.

In the past four years, the gap has been narrowing, with the average price of a home in an urban area rising at five times the rate of one in the countryside, at 10% compared with just 2%.

Halifax said this could reflect a recent increase in first-time buyers coming into the market to snap up properties. First-time buyers account for two-fifths (40%) of house purchases using a mortgage in rural areas, but in towns and cities they make up more than half (52%) of such transactions.

The Government has introduced a string of schemes to improve mortgage access. A mortgage price war was sparked after its Funding for Lending scheme was introduced last year and from this month people with deposits as low as 5% have been able to apply for state-backed mortgages under the Government's flagship Help to Buy scheme.

Lenders have been handing out more mortgages in recent months to first-time buyers than in any other period since the credit crunch started.

Halifax found that a house in a rural area costs £206,423 on average, which is 13% more than the typical cost of a property in an urban area at £182,710.

While a "rural premium" exists in every region across Britain, it ranges from £86,218 in the South East to £11,570 in the North East.

In percentage terms, people living in the West Midlands pay the biggest premium to live in a rural area, at 59%, while those living in the North East pay the least at 9%.

The average house price in the countryside is equivalent to 6.3 times gross annual average earnings, while in urban areas it is lower and therefore potentially more affordable, at 4.9.

Halifax found only five rural areas in Britain where house prices cost less than four times local annual earnings typically, which is the long-term average.

Copeland in Cumbria was named as the most affordable rural area, where the house price-to-earnings ratio was 2.7. This was followed by the Scottish regions of Stirling, where the ratio is 3.4, East Ayrshire where it is 3.5 and the Western Isles, with a ratio of 3.7. Pendle in Lancashire completed the list, with a ratio of 3.9.

At the other end of the scale, the Cotswolds were the least affordable area in rural Britain, with average house prices standing at £318,128 which is 9.4 times the local average income.

First-time buyers account for less than one quarter (23%) of house purchases in the Cotswolds, according to Halifax, marking the smallest proportion in Britain, while Copeland was found to have the biggest percentage share of people taking their first step on the ladder, at 58%.

Martin Ellis, housing economist at Halifax, said: "There is a significant premium on property in the countryside across Great Britain.

"Country living remains a widespread aspiration, but relatively high prices put rural homes out of the reach for many. Potential first-time buyers are particularly affected by high property prices, and consequently they account for a smaller proportion of homebuyers in the countryside than in urban areas."

Halifax used official figures and its own house price database to make its findings.

Here are average house prices by region, with the typical price of a rural property in 2013 followed by that of an urban property, and the percentage difference or "premium" in monetary and percentage terms:

:: North East, £137,010, £125,440, £11,570, 9%

:: North West, £ 200,997, £131,938, £69,059, 52%

:: Yorkshire and The Humber, £ 175,466, £127,452, £48,014, 38%

:: East Midlands, £ 179,692, £134,412, £45,280, 34%

:: West Midlands, £ 231,996, £145,801, £86,196, 59%

:: East of England, £ 235,876, £204,863, £31,013, 15%

:: South East, £318,185, £231,968, £86,218, 37%

:: South West, £232,630, £183,048, £49,583, 27%

:: Scotland, £ 160,374, £137,352, £23,022, 17%

:: Wales, £ 154,270, £131,184, £23,086, 18%

:: London (urban only), £ 316,293 n/a

:: Britain, £ 206,423, £182,710, £23,712

Mortgage lending at highest level since 2008

Mortgage lenders said on Friday that they were financing the largest house-buying spree for five years, in the latest sign of an accelerating housing market.

The Council of Mortgage Lenders (CML) described house prices in London as "resurgent", though it acknowledged that they had risen only modestly elsewhere in the country.

Amid continuing debate about the impact of government-sponsored schemes designed to make credit more easily available, research by the Liberal Democrat peer Lord Oakeshott showed, however, that the house price revival was not just a London phenomenon. 

Houses in more than 50 local authority districts were revealed as less affordable than at the peak of the 2007 credit crunch. Oakeshott's analysis of local authorities in England found the ratio between local house prices and local earnings was higher than it was in 2007 in districts as diverse as Rutland, the Cotswolds and the Suffolk coast.

According to the CML, almost £50bn was advanced to home buyers in the third quarter of 2013, a 17% increase on the previous three months and the highest figure since the third quarter of 2008. Despite a slight dip in September, lending for that month was up 41% on the same month last year, at £16bn.

"Indicators suggest we are witnessing the strongest house purchase performance in five years," said the CML's chief economist, Bob Pannell. "House prices too have revived, but modestly, aside from a resurgent London market."

The earlier than expected introduction of the second stage of Help to Buy, designed to help buyers with deposits as low as 5% of the value of a property has sparked a debate about the potential for a boom in house prices.