By Martin Williamson, Head of Residential Property, Latimer Hinks Solicitors www.latimerhinks.co.uk
Although the property market continues to grow, it is clear that the new mortgage lending rules, which were introduced in April, are beginning to have an effect on the pace of growth.
According to the latest statistics from Nationwide Building Society, house prices continued to rise, but at a much slower pace than previously. Properties rose by 0.1 percent in July with the national average now standing at £188,949 following an average increase of £18,000 over the last 12 months.
Mortgage approvals between January and May had also dropped by 20 percent, with the most likely cause being the stricter Mortgage Market Review (MMR).
Our own research into the Richmondshire and the Dales property market, although positive, showed that the stricter rules were having an effect on the timescale in which a house is sold.
Bridgfords, the Richmond-based estate agent, had seen the number of its instructions stall with no increase over the last 12 months. The new mortgage lending rules are taking their toll on its market, as the average Band D property is currently taking between two and a half and three months to sell.
It is also worth noting that Bridgfords' prices had returned to within five and 10 percent of the previous 2007 house price peak, and, although the timescale between advertising and sales may have increased, its market is certainly performing better than during the recession.
In contrast, the remainder of estate agents surveyed had been experiencing increases in the number of instructions over the past year, but were also seeing similar timescales from advertising to the sale of the average Band D property. It was reported that these properties were taking between three and six months to sell, but, as previously stated, this is a lot better than when the market stalled, only two or three years ago. House prices had also returned to within 75-100 percent of the pre-crisis peak.
Among the property hotspots were Richmond and the Barnard Castle area together with its surrounding villages, with property prices in Catterick Garrison and Colburn not as buoyant.
Regionally, the market is performing well, but it remains to be seen how MMR will continue to affect the market as a whole. Clearly, house price growth is slowing, but it is becoming more difficult for prospective buyers to even get on the property ladder.
More generally, the housing market is beginning to slow down and this is putting suggestions of a housing bubble on the backburner, for now.
Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks. In addition, no responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by the firm.