The government has released good news regarding the UK property market.
House prices rose by 0.7 per cent from March to April, new figures from the Department for Communities and Local Government show.
The government department said that the average cost of a property in Britain went up to £218,875 for the month, driven by a 1.3 per cent rise in the cost of terraced houses and a 0.8 per cent increase in detached and semi-detached properties. This counterbalanced a 0.3 per cent decline in the cost of flats during the same period.
The overall rate of house price inflation was also dragged down from March to April due to the modest nature of the price rise: the rate dropped from 5.2 per cent to 4.9 per cent.
While house price falls might initially seem to be good news for mortgage customers, they are generally seen by mortgage firms as a cue to tighten lending criteria and raise repayment rates: shutting potential first time buyers out of the market.
The government figures are markedly more positive than recent research from mortgage lenders such as Halifax and Nationwide, who tracked house price falls of 2.4 per cent and 2.5 per cent last month respectively.
Economist Howard Archer, who works at Global Insight, is also downbeat on the prospects of the property market over the months to come. "Global Insight expects house prices to fall by 12 per cent in both 2008 and 2009," he commented.
Mr Archer also suggested that the mortgage market in the UK might tighten up further, due to rising inflation affecting the Bank of England's interest rate decisions. He added: "We see significant downside risks to this forecast, particularly if the Bank…does end up raising interest rates."
