As we all know, the property market is constantly changing and therefore can be hard to keep up with. Recently, new statistics have been revealed that claim the average property in the UK is now worth £265,000, a 10.2% increase year on year. In June 2014 house prices reached a new high and experts said that a fall in inflation will reduce the chances of an interest rate rise.
“House prices are increasing strongly across most parts of the UK with prices in London again showing the highest growth,” said the Office for National Statistics. The report suggested that rises across the country in the 12 months up until June were showing no signs of reversing although they slowed, with an increase of just 0.5 per cent between May and June.
London and the south-east continued to record the strongest annual uplifts. The ONS said that if these regions were taken out of the figures, average prices would have increased at a slower pace of 6.3 per cent in the 12 months to June with the average property value at a more modest £201,000.
Property values in the capital have continued to increase around twice as quickly as those in the rest of the UK, with London seeing a 19.3 per cent jump in the 12 months up to June 2014. The average price of a property in London is now just shy of half-a-million pounds at £499,000, but the ONS stressed that “prices are increasing strongly across most parts of the UK.”
Wales has had the smallest growth with 3.5% increase year-on-year. The average house price in Wales is £167,000, which compared to England’s 10.7 per cent increase and average house price of £276,000, is negligible. England’s rates have increased the fastest and the north-east is the English region with the lowest average property price at £150,000.
Recently, there have been reports that the market has calmed down slightly and more properties have been put up for sale. In London, a very expensive city, the average house price got to £499,000 in June and the index is now 35.6 per cent higher than in January 2008. The ONS said: “House prices are increasing strongly across most parts of the UK, with prices in London again showing the highest growth.”
These price increases do not just affect people buying homes however; it also affects those that rent properties. Landlords looking after properties must ensure they have landlord insurance to cover themselves and protect their investment, which added to the increasing price of properties can have an adverse effect on rent prices. The director of Generation Rent, Alex Hilton said: “The average private renter effectively spends two days every week working to pay off their landlord’s mortgage, and with prices rising at this rate, fewer renters will ever escape this trap.
“We need to build many more homes to bring supply back in line with demand, and those of us who are stuck with the insecure private rented sector for the foreseeable future need better rights and the ability to call the place we live a home.”
Chief Executive of the housing charity Shelter, Campbell Robb, added: “From a new generation of part-rent part-buy homes, to encouraging smaller builders back into the market, there are ways to fix this country’s housing crisis. If we don’t see radical action soon, more and more people will be left without a hope of ever building a stable future in a home of their own.”
Discussing the future of the UK property market, Brian Murphy, head of lending at the Mortgage Advice Bureau, said: “Tighter lending regulations and the summer slowdown have started to inject a double dose of reality into the housing market, with the rate of price rises outside London and the south-east far lower than the UK average.
“Nevertheless, the slowing of growth between May and June has been modest at best. The latest ONS figures suggest we have passed the point of seeing a higher rate of increase every month – temporarily at least – but demand for home ownership remains strong and will help to uphold prices for the foreseeable future.”
The Bank of England has decided that putting a cap on mortgages may also benefit home owners in the long run. Because of the fast growth in house prices the Bank of England worry that soon, people won’t be able to afford their mortgages. This is why they want to cap some mortgages at 4.5 times the borrower’s income. By doing this, the Bank of England will prevent any lending getting too far ahead of the growth of the home owner’s income.
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