UK House Prices Are More Expensive Than Ever
UK house prices are up 11.7% year on year and have reached a new record high of £272,000, according to official report from the Office of National Statistics.
Several UK regions, including East Midlands, West Midlands and South West saw all-time high property price rises in the month of July. These regions have joined London in having price levels higher than the pre-financial crisis of 2007/2008.
Annual house price increases in the UK were driven by London’s 19.1% increase and to a lesser extent, increases in the South East with 12.2% increase and the East with 10.6% increase. On a month-on-month basis, property values have increased by 1.6% between June and July.
If you took London and the South East out of the mix, the UK house prices have still increased by a substantial 7.9% between July 2013 and July 2014.
Furthermore, in July 2014 prices paid by first time buyers is a staggering 13.5% higher on average than one year ago and 10.9% for buyers already on the housing ladder. First-time buyers now have to borrow a record amount to purchase a property with the average loan at £127,500 in July.
The London Factor
Housing prices are often looked at through a rosy-coloured London kaleidoscope that distorts the image of the UK property market. You have to pull back and look at the bigger picture of the regions to get a proper view of the reality of the current real estate market.
According to research from Property Wire, house price growth has slowed across the UK except in the London, East Anglia and the South East in July. Although the regions to continue to soar to new house price heights, the rest of the country is staggering.
However, the market is starting to see London prices being reined in which should pump the brakes on the annual housing price inflation. Although London is starting to cool off, it is essential that the momentum that has stimulated the London market continue through the rest of the market while simultaneously keeping price rises steady and controlled.
Because the property market numbers are skewed by the London factor, experts urge that mechanisms like Help to Buy and the Bank of England’s historical low interest rates aren’t dismantled. Compared to the 2008 situation, the housing market has improved; it is not completely secure yet and still needs the support to recapture its pre-crisis vitality.
The property market is finally returning to business as usual. As consumer confidence continues to grow, natural trading conditions are restored to balance both supply and demand, the sales should continue to climb comfortably throughout the year and across the UK.