House sales hit seven-year high

House sales hit seven-year high

First-time buyers and landlords helped push house sales to a seven-year high last month.

According to the latest LSL House Price Index, the number of house sales hit an estimated 90,000 in July, up 10% on the previous month and 21% higher than in July 2013.

It is also the highest total recorded since November 2007, with growth being driven by several key sectors of the market.

"First-time buyers and buy-to-let landlords are helping the flow of activity in the UK housing market," said David Brown of LSL. "Flats have seen the largest increase in sales during the second quarter of this year, rising a third (36%) compared to Q2 2013, [but] chequered supply across the country has created considerable regional variation in sales."

Indeed, London and the South East have seen the slowest growth in house sales over the year, due to the limited availability of properties in these areas.

Elsewhere, lower prices and the Help to Buy scheme have been aiding activity, with the biggest boost in sales being in the North West and East Midlands (transaction totals here increased by 32% year-on-year).

The research also revealed that the average house price in the UK now stands at £270,636, 0.6% higher than in June and 9.9% up on a year ago.

Incredibly, in London, average prices have now reached £560,386, following a £10,850 (2.0%) monthly rise.

However, amid fears of a property bubble, David Brown believes the Government's housing policy should take into account what is happening across the whole of the UK rather than just the capital.

"If London and the South East are removed from the equation, the annual change in average houses prices drops by 5.3% to 4.6%," he explains.

"Average prices in Northamptonshire, Bournemouth and Wiltshire rose in June as the housing recovery started to spread. The tendrils of recovery may be branching out from the centre, but they haven't yet unfurled to all corners of the country. Outside of London, the South East and East Midlands, prices dropped and stabilised across all other seven regions in June.

"A more thoughtful and prudent housing market is emerging," he adds. "Lending is stabilising to sustainable levels, and supply and demand is more balanced. Further interventions or tighter rules could fracture the health of the recovery, particularly further afield where schemes like Help to Buy are a necessary tonic spurring new buyers onto the housing ladder."

This week's decision by the Bank of England to keep base rate on hold at 0.5% will have been welcomed by many mortgage borrowers with home loans that track the rate.

However, with fixed rate mortgages starting to rise, fixing to a low-rate mortgage can guarantee your payments won't rise significantly in the near-future – a great way to help you budget – so you won't be left struggling as soon as base rate rises.

And, if you're able to keep your repayments low, you may want to consider overpaying your mortgage. Not only will it reduce your overall balance, but it could potentially help to reduce your loan-to-value ratio so you can get a better deal when it's time to remortgage. All in all, it could be a great time to get on board, so see what deals are out there and take advantage of a more stable housing market.

Source: Moneyfacts