House prices have risen by 6.1 per cent in the past year – with the average cost of a home in London inching beyond the half-million mark to £531,000.
The increase recorded in the year to September marked an acceleration, after a rise of 5.5 per cent rise in the year to August, according to the Office for National Statistics. It was, however, well below the 12 per cent increase that was seen last year.
House prices are said to be rising at different rates according to the various indices, but all show that they are still accelerating ahead of wage increases and are hitting new records across the country as a whole.
But the national average masks wide variations across the UK. Property prices rose by 10.2 per cent in Northern Ireland, but just 1.1 per cent in Wales and Scotland. England recorded a rise of 6.4 per cent.
Howard Archer of IHS Global Insight told the Daily Mail he predicts further “solid” house price increases in the coming months. “We expect house prices to rise by around six per cent to seven per cent in 2016,” he says.
The latest official statistics come after a Rightmove report warned this week that at least 350,000 households will be locked out of the housing market by 2020 because of a lack of affordable homes (see below).
Yesterday a separate report from PricewaterhouseCoopers projected that by 2025 only around a quarter of 20-39 year olds in England would be owner occupiers, compared to around three quarters of over-55 year olds, the BBCreports.
House prices: 350,000 more unable to afford homes by 2020
Estate agent Savills has published research highlighting the scale of the looming affordability crisis in UK housing, claiming 350,000 people will need help to rent or buy property by 2020.
According to the figures, around 70,000 new households a year will be unable to afford the market rate for rental or mortgages each year for the next five years. The Guardian reports this is based on the assumption that a household can ‘afford’ to spend 30 per cent of its income on housing.
The claims come as concern builds over a lack of affordable housing, as supply remains scant and private providers consider scaling back development amid cuts to maximum rents they can charge.
Some existing social houses may also be sold at a discount under a revamped ‘right to buy’ scheme, although the government claims these will be replaced.
Those being forced to spend more of their income on housing could struggle to pay other bills, especially if they are subject to the benefits cap. The spiralling rental market in particular will almost certainly also increase the government’s housing benefits bill, as the local housing allowance rates are forced higher.
The news comes as Rightmove data published today suggests the fall in valuations for houses being sold in November has dropped relative to October by the lowest amount since 2011.
Houses for sale in the run up to Christmas are typically priced lower to attract buyers in a quieter market, but with low mortgage rates holding up demand at a time when supply remains low, asking prices have fallen by just 1.3 per cent,The Times says.
Miles Shipside, Rightmove’s director and housing market analyst, said: “Buoyant market conditions and a confident outlook for 2016 mean that the reduction, while no doubt welcome to hard-pressed buyers, is the most Scrooge-like since 2011.
“It’s likely to be a short-lived respite, as the combination of high confidence and low interest rates is a recipe for higher prices next year.”
House prices: will demand continue to outstrip supply?
In the ongoing debate on how house prices will evolve over the next few years, the Royal Institute for Chartered Surveyors (Rics) has expressed concerns over the affordability of UK property.
The results of Rics’s latest monthly survey found that its members were predicting overall rises of around 4.5 per cent a year for the next five years, an increase that will add around £42,000 to the average cost of a home in England and Wales, according to The Guardian. With wages for most workers currently rising by around 2.5 per cent, property is only becoming more expensive while saving for a deposit is only getting harder.
Rics found evidence that the shortage of housing that’s now endemic in the property market is continuing. “The supply of properties coming on to the market fell for a ninth month running in October,” it noted, with 10 per cent more members seeing a rise in new instructions than a fall. “At the same time, inquiries from would-be buyers rose.”
“It is hard to get away from the issue of supply when it comes to the current state of the housing market,” said Rics’s chief economist, Simon Rubinsohn. “The legacy of the drop in new build, following the onset of the global financial crisis, is now really hitting home, with both the sales and letting markets continuing to show demand outstripping supply on a month-by-month basis.”
Estate agents in East Anglia were most likely to report price rises, with 91 per cent more surveyors reporting an increase than a fall. The area joins the southeast and London as a region where a majority of surveyors report that current prices are “expensive”, the Financial Times notes.
In London only a slim majority of surveyors expect prices in what is already the most expensive market in the UK – and according to UBS the most overpriced in the world (see below) – to increase in the coming months. The FT says this reflects a slowdown at the top of the market, where stamp duty changes are hitting the sale of properties worth more than £1.5m.
The overall property price increase in the capital is instead being “driven by cheaper London boroughs such as Harrow and Newham”.
Source : http://www.theweek.co.uk/