Mortgage Advice Bureau comments on the Land Registry House Price Index (October)

Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:

“House prices in October saw significant annual growth of 5.6 per cent. Affordability remains a concern for many first-time buyers, and the rate of price growth isn’t likely to slow unless housing supply is increased. Although the changes announced in the recent Autumn Statement will increase the number of new homes in the long-term, landlords and second-homeowners will be rushing to purchase before stamp duty changes come into effect. This could temporarily inflate prices in some parts of the market.

“The surcharge on stamp duty means landlords are also likely to look for lower priced properties. We have already seen this trend in the third quarter of 2015, with seven in ten landlords looking for a mortgage on properties below £250,000.* This trend is likely to increase in areas where lower priced properties are available, as landlords can benefit from more attractive yields as well as reduce their stamp duty bill.

“First-time buyers in the capital currently face average prices of over half a million pounds, according to October’s figures. The London Help To Buy initiative will therefore certainly come as welcome news to all those struggling in this highly competitive market. Given that average house prices in London shot up by 10.6 per cent in 12 months, the higher 40 per cent equity loan is clearly needed. It’s encouraging to see the Government recognise the affordability challenges in this unique market and act on it.”