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Average home in Britain now £272,000

The property market has rarely been out of the news over the past few months with stories about the booming market, particularly in London. So it’s little surprise that the latest figures from the Office of National Statistics have shown the average cost of a UK home increased by 1.6% in the month of July to £272,000. Prices also increased by 11% in the year to July, which was up from 10.2% in the month of June. However, warnings of an unsustainable market should be tempered in the upcoming months, as it is anticipated that the extreme levels of growth witnessed in the early part of year will start to slow to a more long-term upward trend. Indeed, we are already seeing a cooling of the market compared to the first six months of 2014, with Winkworth offices reporting a return to more ‘normal’ conditions in terms of price growth and transaction levels. As Tom Dogger, Director of Winkworth Knightsbridge, explains, “The property market in the first half of 2014 was largely bolstered by economic confidence, both in the UK and Europe, which meant more people looked to buy. In addition, there was pressure from sellers to increase asking prices in order to capitalise on the low number of properties on the market, which made demand extremely high. However, increasing prices encouraged more people to put their properties onto the market, easing demand and enabling more offers on price, which slowed the rapid pace of the market to levels that are more expected at this time of year.” Other factors contributing to the slowing of the market to a more sustainable level include the Mortgage Market Review (MMR) which came into force in April 2014 in an effort to curb reckless lending in order to build a strong economy and avoid the mistakes that led to the downturn in 2008. It scrutinises those borrowing money in more depth than ever before with lenders now asking detailed questions not only about earnings but also about spending including, in some, cases haircuts, eating out and shopping to determine affordability and as such how much they’re willing to lend. Those looking to get a mortgage are also required to seek advice from a lender, mortgage broker or financial adviser before they apply. This has meant that getting a mortgage has taken longer and also has been harder to approve, which in turn has had an impact on transaction levels. However, many are looking to take advantage of the current interest rates before the expected rises that have been hinted at by Mark Carney, Governor of the Bank of England. Currently, the bank rates are at an historic low of 0.5% and have been so for the past five years. However, it is anticipated that over the next three years this will increase to 2.5%, which will impact of mortgage lending and increase repayments on an average mortgage by approximately £200 per month. As such, those looking to buy using a mortgage are keen to get in quickly and organise fixed rates, if possible. The general election in the UK next year will also have an impact on the market until there are certainties about who is in power. As our last blog shows, in the months leading up to a general election the property market slows as people are unwilling to make a move before they know which political party and policies will be in effect. However, following the election, the property market tends to exceed the average growth expected from non-election years. Dominic Agace, CEO of Winkworth, explains, “While the London property market has certainly undergone a change since the extreme levels witnessed in the early part of the year, we expect prices to remain on a sustainable long term uptrend, slowing from the 15% annualised rate witnessed this year to around 5% in 2015. This will be subject to some extent to the outcome of the general election in May 2015 and any initiatives around it that may cause anxiety in the property market.” So although the figures from the ONS House Price Index for July appear to show a booming market, the current conditions should benefit both home owners and those looking to buy both now and in the long run, and should help to sustain the market and economy. If you have any questions about the property market or if you are thinking of buying, selling, renting or letting then speak to your local office today. To find yours click here.    

The property market has rarely been out of the news over the past few months with stories about the booming market, particularly in London. So it’s little surprise that the latest figures from the Office of National Statistics have shown the average cost of a UK home increased by 1.6% in the month of July to £272,000. Prices also increased by 11% in the year to July, which was up from 10.2% in the month of June.

However, warnings of an unsustainable market should be tempered in the upcoming months, as it is anticipated that the extreme levels of growth witnessed in the early part of year will start to slow to a more long-term upward trend. Indeed, we are already seeing a cooling of the market compared to the first six months of 2014, with Winkworth offices reporting a return to more ‘normal’ conditions in terms of price growth and transaction levels.

As Tom Dogger, Director of Winkworth Knightsbridge, explains, “The property market in the first half of 2014 was largely bolstered by economic confidence, both in the UK and Europe, which meant more people looked to buy. In addition, there was pressure from sellers to increase asking prices in order to capitalise on the low number of properties on the market, which made demand extremely high. However, increasing prices encouraged more people to put their properties onto the market, easing demand and enabling more offers on price, which slowed the rapid pace of the market to levels that are more expected at this time of year.”

Other factors contributing to the slowing of the market to a more sustainable level include the Mortgage Market Review (MMR) which came into force in April 2014 in an effort to curb reckless lending in order to build a strong economy and avoid the mistakes that led to the downturn in 2008. It scrutinises those borrowing money in more depth than ever before with lenders now asking detailed questions not only about earnings but also about spending including, in some, cases haircuts, eating out and shopping to determine affordability and as such how much they’re willing to lend. Those looking to get a mortgage are also required to seek advice from a lender, mortgage broker or financial adviser before they apply. This has meant that getting a mortgage has taken longer and also has been harder to approve, which in turn has had an impact on transaction levels.

However, many are looking to take advantage of the current interest rates before the expected rises that have been hinted at by Mark Carney, Governor of the Bank of England. Currently, the bank rates are at an historic low of 0.5% and have been so for the past five years. However, it is anticipated that over the next three years this will increase to 2.5%, which will impact of mortgage lending and increase repayments on an average mortgage by approximately £200 per month. As such, those looking to buy using a mortgage are keen to get in quickly and organise fixed rates, if possible.

The general election in the UK next year will also have an impact on the market until there are certainties about who is in power. As our last blog shows, in the months leading up to a general election the property market slows as people are unwilling to make a move before they know which political party and policies will be in effect. However, following the election, the property market tends to exceed the average growth expected from non-election years. Dominic Agace, CEO of Winkworth, explains, “While the London property market has certainly undergone a change since the extreme levels witnessed in the early part of the year, we expect prices to remain on a sustainable long term uptrend, slowing from the 15% annualised rate witnessed this year to around 5% in 2015. This will be subject to some extent to the outcome of the general election in May 2015 and any initiatives around it that may cause anxiety in the property market.”

So although the figures from the ONS House Price Index for July appear to show a booming market, the current conditions should benefit both home owners and those looking to buy both now and in the long run, and should help to sustain the market and economy. If you have any questions about the property market or if you are thinking of buying, selling, renting or letting then speak to your local office today. To find yours click here.

 

 

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