LENDING for property purchases leapt to its highest level since the end of 2008 in the second quarter, according to figures released yesterday by the Council of Mortgage Lenders (CML).
Gross lending between April and June reached £42bn, up nearly a quarter on the previous three months. In June alone, £15bn was lent, rising two per cent from May and 26 per cent higher than the same month in 2012.
Savills UK, the real estate services firm, also hiked its forecast for house price increases. Though the group originally thought prices would rise by only 0.5 per cent this year, it now expects a 3.5 per cent jump, well above wage increases.
The property firm also predicts prices to rise by nearly a fifth, or 18 per cent, in the next five years, revised upwards from the 11.5 per cent that it previously forecast.
This means that in 2015, the average house in the UK will reach its 2007 price, scaling the most recent peak in values. However, London prices have long since passed their pre-crash levels.
Both surveys add to a mounting body of evidence suggesting that the housing market is rebounding, with prices starting to rise ahead of consumer price inflation (CPI) again.
IHS Insight’s chief economist, Howard Archer, attributed much of the increase in prices to new government schemes that will attempt to boost property sales: “Housing market activity is now really stepping up a gear, helped by improving consumer confidence and elevated employment, as well as by the funding for lending Scheme and the first stage of the help to buy initiative.”
Many analysts have suggested that the help to buy policy, which allows for smaller deposits, will serve to overheat the housing market. The last governor of the Bank of England, Sir Mervyn King, suggested that the policy should not become permanent.