Figures released by the Bank of England (BoE) have shown that the housing market was buoyant in April, despite the stamp duty holiday for first-time buyers coming to an end on March 24th.
Mortgage approvals rose from 51,067 in March to 51,823 in April. Net mortgage lending rose by its highest figure since January, up by £1.139 billion, exceeding previous forecasts.
“There appears to be a very, very slow thaw going on in the housing market,” said BNP Paribas economist David Tinsley.
Although the BoE statistics are a positive sign for the property market in the UK, current figures for mortgage lending are still below those recorded before the start of the financial crisis. In addition, properties prices have dipped by a figure of 25% in real terms.
“We expect house prices to fall by around 3 percent by the end of 2012,” said Howard Archer, economist at IHS Global Insight.
“The risk that house prices could fall even more than this is currently being lifted by the increased downside risks to the UK economic outlook, particularly coming from the situation in Greece/euro zone.”
While economists have predicted that the housing market will level out or slightly decline, property developers are more optimistic for the market’s prospects this year.
Developers St. Modwen (SMP.L) and Telford Homes (TELF.L) have argued that the property market in London and the south east of England would remain strong this year.
The capital’s housing market has been bolstered by demand from overseas investors. London experienced a property price boom in April, rising 5.1% within the month. Average properties in London are £360,721, exceeding the national average for England and Wales.