House prices show ‘first annual rise for 13 months’

House prices rose by 0.5% in May compared to the previous month, and by 1.9% on an annual basis, LSL said

House prices have risen on an annual basis for the first time in 13 months, according to LSL Property Services.

Prices rose by 0.5% in May compared to the previous month, and by 1.9% on an annual basis, the group said, whose index is produced by one of the biggest residential property groups in the country.

Annual price growth returned to Wales (up by 1.1% annually) and the east Midlands (0.8%), and the rate of decline reduced in a further seven areas. In London, where prices have continued rising despite the slump in the rest of England and Wales, prices rose by 2.4% on an annual basis.

However, Peter Williams, the housing market specialist who works on the index, says the May rise is largely attributable to a drop in house prices in May and June 2011 rather than a big increase now.

LSL also reported the number of house sales rose to 60,000 in May, up from about 45,000 in April, indicating that a slump caused by a rush of first-time buyers to complete purchases before the end of the stamp duty concession in March, is now over.

Figures published by the Council of Mortgage Lenders earlier in the week showed that the number of house purchase loans for first-time buyers fell by 48% in April 2012 compared to the previous month, while the purchase of properties valued between £125,000 and £250,000 – the price band affected by the stamp duty exemption – fell by 70%.

The CML said: “The average loan amount fell from £117,000 in March to £98,000 in April, and first-time buyers typically borrowed 3.12 times their income, down from 3.34 in March. These changes are almost wholly because of the trend in April towards cheaper properties rather than a real improvement in affordability for first-time buyers.”

However, estate agents should not start celebrating the rise in transactions just yet. Williams said: “We estimate that transactions in May for England and Wales, on a non-seasonally adjusted basis, totalled 60,000 properties. This estimated figure for May 2012 represents 67% of the long-term average for the month of May, calculated over the period 1995-2011.” © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds

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