Since the recession started in Autumn 2008, house prices have plummeted and we’ve been told that people ‘just aren’t moving anymore’. But news is now coming out which might be
indicating that things are on the turn, as property prices climbed by 0.4% in May.
This means that prices rose by 1.1% from May 2012 and
the average price of a house in the United Kingdom is now £167,912, an increase from £165,586
in April - a month that saw house prices rise by 0.9% year-on-year from April
2012. The yearly rise in May is
the fastest annual increase seen since November
2011.
Robert Gardner, Nationwide’s Chief Economist, said these
results show that the housing market is “gaining momentum”. He stated: “There has been 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.
Indeed, mortgage rates have fallen back towards all-time
lows in recent months.” He also stated house prices have been in the positive
territory since October 2012, while
property transactions are typically 5%
above the monthly average last year. “With the UK returning to growth in the first quarter of 2013, the improvement
in wider economic conditions may also be playing a role in boosting sentiment.”
Mr Gardner said the ongoing low interest rates combined with
Government policy could mean activity will carry on upwards in the coming
months. But he warned that progress was likely to be gradual, with a continued
tough jobs market and pressure on household
budgets. “In real terms, average weekly wages have been falling for some time
and are now back at the level prevailing in late 2003,” he said.
The number of mortgages on the market has increased sharply since the Government launched the Funding for Lending scheme last August, which has given lenders access to cheap finance to help borrowers. Lenders have been slashing their rates and they have also reported increased numbers of first-time buyers entering the market. Government schemes called NewBuy and Help to Buy have also been introduced to specifically give people with smaller deposits a helping hand.
It is said that confidence has surged among first-time buyers and those with small deposits as lenders have embarked on a bidding war to offer some of the best fixed-rate mortgage deals. It has been helped by Chancellor George Osborne’s attempts to kick-start the housing market, including his Help to Buy scheme which will underwrite up to £130billion of mortgage debt and begins in January.
According to a new report, house prices could be pumped up by 8% by the end of next year thanks to the government’s measures to subsidise mortgages and slash loan rates, according to a new report.
The forecast will add to growing fears that George Osborne’s growth strategy could lead to a new cycle of boom and bust. However, last week, the OECD warned that the chancellor’s scheme could push up prices rather than increase the supply of new homes. The report, from the investment bank Morgan Stanley, forecasts an improved outlook for the property market for the first time in several years. Its central forecast is for an 8% rise in average house prices by the end of next year, but its “bull case” is for a 13% gain.
If you are moving house, or looking to expand your portfolio, make sure you get comprehensive home insurance from Discount Landlord.
Alex Birch
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