According to the Halifax house price index the price of the average UK home rose 1.1 % In March.

This was the eighth rise in the last nine months and the March rises pushed prices up 9.1 per cent since hitting their lowest point in April 2009.

Martin Ellis, housing economist, said the rate of growth was still slowing overall after the return of the £125,000 Stamp Duty threshold and poor weather at the start of the year.

He said: “There are signs that an increase in the number of properties available for sale is beginning to reduce the imbalance between supply and demand. This should help to contain the upward pressure on house prices.”

The average house price is now £168,521.

In addition, Bank of England industry-wide figures show that the number of mortgages approved to finance house purchase – a leading indicator of completed house sales – fell by a seasonally adjusted two per cent between January and February following a much larger decline of 17 per cent in the previous month.

However, the temporary increase in the lowest stamp duty threshold announced in last month’s Budget will mean that most first-time buyers do not pay the tax.

At £250,000, more than nine in ten first-time buyers would have been exempt from paying stamp duty in 2009 compared with just over one in two if the lowest threshold had been £125,000. The southern
regions of England will benefit most. Around three-quarters of first-time buyers in Greater London and the South East will be removed from the stamp duty tax net as a result of increasing the threshold from £125,000 to £250,000.

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%.  

 The Committee also voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion.

The base rate has not changed for over 12 months with the last change on 5 March 2009 with a reduction of 0.5 percentage points from 1.0% to 0.5%.  

A programme of asset purchases financed by the issuance of central bank reserves was initiated on 5 March 2009.  The most recent change in the size of that programme was an increase of £25 billion to a total of £200 billion on 5 November 2009.

With the timing of the General Election the next Monetary Policy Committee meeting will conclude on the morning of Monday 10 May, with the decision announced at 12 noon.  The Inflation Report will be published as originally scheduled on Wednesday 12 May.

Information on the Asset Purchase Facility can be found on the Bank of England website at http://www.bankofengland.co.uk/monetarypolicy/assetpurchases.htm.

The Bank will continue to purchase high-quality private sector assets on behalf of the Treasury and financed by the issue of Treasury bills, in line with the arrangements announced on 29 January 2009.

Emilio Botín, chairman of Banco Santander, said: “This is a historic day for Santander as its name is firmly established on the UK high street.

“When Santander acquired Abbey in 2004, there were some who doubted we could make it a success. Today, there can be no doubts. Over the last five years we have transformed our UK business into one of the most successful banks in the country. The decision to become Santander will put us in an even stronger position the UK.”

The £125,000 threshold for when you start to pay SDLT was introduced again on 1 January 2010. The previous starting rate was £175,000 – for purchases made between 3 September 2008 and 31 December 2009.

If you buy a property in the UK over a certain purchase price you have to pay Stamp Duty Land Tax (SDLT). This is charged on all purchases of houses, flats and other land and buildings.

If you buy either a freehold or a leasehold property and the purchase price is more than £125,000, you pay SDLT of between one and four per cent of the whole purchase price. If the purchase price is £125,000 or less you don’t pay any SDLT.

See the table below for more detail.

SDLT Disadvantaged Areas Relief

If you buy property in an area designated by the government as ‘disadvantaged’ you may qualify for Disadvantaged Areas Relief. In this case the threshold for SDLT is £150,000.

Disadvantaged Areas Relief did not apply for residential property purchases between 3 September 2008 and 31 December 2009 inclusive. The threshold during that period was £175,000 which is higher than the previous Disadvantaged Areas Relief threshold. You can check the HMRC website to see if the property you are buying is in an area designated as disadvantaged.

The Bank of England’s Monetary Policy Committee (MPC) has announced that the base rate of interest has been frozen at a historic low of 0.5% for the ninth month in succession.

The MPC also voted to continue with its programme of Quantitative Easing (QE) – which was extended by an additional £25 billion last month to £200 billion – a move welcomed by businesses who believed that the economy would stall without it.

According to Nationwide House Price Index for November 2009, house prices increased by 0.5% – the same rate as in October.

The Lender also reports that year-on-year house price inflation has increased from 2.0% to 2.7%, and states that the Labour market has so far held up better than expected this year.

Commenting on the figures Martin Gahbauer, Nationwide’s Chief Economist, said:

“The monthly rate of house price inflation for November is at a seasonally adjusted 0.5%, leaving the average price of a typical property 2.7% higher than a year earlier. At £162,764, the average house price is at a similar level to where it was in early 2006.

The 3 month on 3 month rate of change – generally a smoother indicator of the near term trend – dropped to 2.8% from 3.5% in October and 3.8% in September. This suggests that house prices are now rising at a more moderate pace than in the spring and summer months, when they experienced a very strong bounce from the early 2009 lows.

“The outlook for the housing market remains crucially dependent on labour market conditions, and here recent developments have been somewhat more encouraging than might have been expected.

With the UK experiencing its longest and deepest recession since WWII, most economists expected unemployment to increase very sharply in 2009, perhaps breaching the psychologically important three million mark by the end of the year.

While unemployment has indeed increased noticeably, the rise has not been as rapid and pronounced as previously feared. Based on the latest labour market figures from September, it now looks unlikely that the jobless total will reach three million before the year is up.”

The Bank of England (BoE) has maintained interest rates at 0.5% for the eighth consecutive month.

Nationwide House price index has shown that House prices rose by 0.9% in September, this is the fifth monthly rise in a row.  According to the index price growth is down just –2.7% compared to last year, but down -13.5% since the market peaked in October 2007.

Martin Gahbauer, Nationwide’s Chief Economist, said: “The 3 month on 3 month rate of change, generally a smoother indicator of the near term trend, rose from 3.3% in August to 3.8% in September, the highest level since August 2004.

He added: “At £161,816, the average price of a typical UK property was essentially unchanged from a year earlier, representing the first time since March 2008 that the year-on-year rate of change has not been negative. Over the first nine months of 2009, the seasonally adjusted index of house prices has risen by 4.1%.”

“One reason to remain cautious about the outlook for house prices is that turnover in the market is still well below normal levels. The housing turnover rate – measuring the percentage of the private sector housing stock changing hands on an annualised basis – fell to only 3% at the end of 2008. Although the turnover rate has since recovered to nearly 4%, there is still quite some way to go before turnover reaches the pre-downturn level of between 7% and 8%.

Michael White, chief executive of online mortgage advisers Email Mortgages.com, said: “To talk of an average UK house price is always something of a red herring given the UK is very much a regional housing market – some homeowners, for example, those in the London commuter belt, will have seen their property bounce back strongly since the large falls of last year, while others have only seen a slight house price recovery.  One must expect that the recent house price increases, if they are to be maintained at all, will only be in very small increments and this will be the pattern for the foreseeable future.”

White said “the real issue for the UK housing market continues to be the low level of mortgage lending by the banks; a recent Bank of England Credit Conditions Survey for quarter three outlines what anyone working in the mortgage market has known for some time, that lenders have not increased lending to businesses or individuals as previously promised, instead lending has been cut.  Given the small number of lenders currently active in the market it is therefore unsurprising that many potential house purchases are not going ahead because of the difficulty accessing mortgage finance; a particularly acute problem for first-time buyers.”

By comparison, those with a 40% deposit have seen a 1.86% reduction in the average mortgage rate.

Borrowers with a 10% deposit taking out a new two year deal on a £150,000 mortgage will only see their monthly repayment fall £11 from £988 to £977, while those with a 40% deposit see a reduction of £165 per month from £998 to £833.

Michelle Slade, spokesperson at Moneyfacts.co.uk, commented: “A higher margin for risk is expected on a 90% LTV deal, but a 4.25% margin over the cost of funding seems excessive and difficult to justify.

“Sub-two percent rates are being advertised by lenders, but we have no way of knowing how many borrowers actually qualify for these deals. Having been tempted through the door, many are likely to be offered much higher rates.

“First time buyers, once seemingly the lifeblood of the property market are now apparently being ignored as lenders continue to cherry pick lower risk borrowers.

“It appears borrowers searching out a new deal are paying a higher price to subsidise existing customers, many of which are paying record low rates.”

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