House prices in the UK continue to rise, seeing a modest increase of 0.3% in June, according to the Nationwide Building Society. Overall, this puts the annual figure at 1.9%, which is the fastest pace of growth since September 2010.
The boost is being driven by a combination of government plans to “reboot the property market” and falling mortgage rates, with estate agents reporting the effects of cheaper mortgages due to the Funding for Lending scheme.
Further to this, the newly introduced schemes aimed at helping buyers to purchase a home or move further up the property ladder has also boosted confidence. The Equity Loan scheme began in April and has so far seen 4000 house hunters reserve a new build, whilst the Mortgage Guarantee scheme is due to be launched in January 2014.
Prices to surpass pre-crisis peak
According to the CEBR, house prices will reach an average of £227,000 next year, rising to £267,000 by 2018. However, whilst prices saw “strong gains” in London and the South East, smaller rises were seen in Wales and the North West and other UK regions, especially the North of England and Scotland saw “significant drops”.
A full report on the ups and downs of the property market since 2007 can be found here.
It’s thought that the market could continue to improve over the course of this year, if the Funding for Lending scheme continues to push down mortgage rates. These have reduced significantly recently, especially for those with a 40% deposit, who can access deals as low as under 3%, whilst those with a 10% deposit can get deals with a 5% or lower interest rate.
However, continued improvement is fragile, with the Eurozone crisis continuing to be a threat and the cost of moving high. This is due to stamp duty, solicitor’s and estate agent fees setting families back around £15,000 when buying a home worth £250,000. This is before the buyer even finds a deposit.
Currently, the average house price is around £168,941and according to Nationwide, there are few signs that housing stock is improving.
"Demand for homes has been supported by further modest gains in employment, as well as an improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures, such as the Funding for Lending Scheme,” said Robert Gardner, Nationwide's chief economist.
"Signs of a modest improvement in wider economic conditions may also be playing a role in boosting buyer sentiment."
Article by Armun Peeroozee - Armun is the Lettings Manager for Hunters West Hapstead branch. Armun is well known in the local area and extremley knowledgable in the field of lettings and sales.