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House prices see slight rise in February

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  • 03/03/2016
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House prices see slight rise in February
Average house prices increased by 0.3% in February, taking the average UK property price to £196,930, according to the latest monthly index from Nationwide.

This pushes annual house price inflation up slightly to 4.8%, in line with the narrow range of between 3% and 5% that the building society has tracked since last summer.

The number of mortgage approvals also rose in January to almost 75,000, up from around 71,000 approvals in December and the highest number since January 2014, according to the mutual.

However, Robert Gardner, Nationwide’s chief economist, said: “…much of the increase is likely to be related to the impending increase in Stamp Duty on second homes which is due to take effect in April 2016. This is likely to have brought forward a significant number of purchases, which in turn will probably result in a fall back in approvals during the spring/summer.”

Mark Posniak, managing director at Dragonfly Property Finance, agreed that there was uncertainty currently shrouding the market: “It’s hard to know if the April Stamp Duty deadline will be a speed bump for the market or a speed boost.

“Demand from buy-to-let investors will fall away during March but first time buyers could arrive in numbers. As the buy to let purge starts in earnest, the appallingly low home ownership rate for younger people may well pick up.”

Home ownership rates are now stabilising, at 63.6% in 2014/15, after declining gradually over the past 12 years. But Nationwide pointed out that this is well below the peak of 70.9% recorded in 2003.

Gardner explained: “If we look at the shift in tenure patterns by age over the past decade, we see a particularly marked decline in home ownership rates among the younger age groups, especially among 25-34 year olds, traditionally the segment containing most first-time buyers. While there was a marginal uptick in 2015, the proportion of younger adults who own their own home (currently 37%) remains considerably lower than ten years ago.”

Over the same period, the proportion of people renting (either privately or through a local authority or housing association) increased from 43% to 63%. For 16-24 year olds, the proportion renting increased from 73% to 92% over the same period.

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