House prices "bubbling nicely" to hit all-time high of #247,000
Tue 15 Oct 2013
The average UK home now costs a record 247,000 after a 3.8% rise in the year to August, leaving the industry celebrating a nationwide property market recovery. Prices rose in every region, apart from Scotland, to surpass their previous peak in January 2008, according to yesterday's figures from the Office for National Statistics. Prices grew 8.7% in London, with the East Midlands (3.8%) and West Midlands (3.5%) also growing strongly. Excluding London and the South East, UK house prices increased by 2.1%. The average first-time buyer property rose 4.9% across the year. A strong summer saw UK house prices increasing by 0.5% in August alone.
David Brown, commercial director of LSL Property Services, said: Theres an air of bullish confidence surrounding the housing market. Prices are at record highs, demand is bubbling away nicely, and both borrowers and lenders seem to be convinced the economic downturn is well and truly a thing of the past. There are sure signs that the economy is on track towards a complete recovery." Richard Sexton, director of e.surv chartered surveyors, said the housing market is "rollicking along". Banks are more willing to lend to borrowers with low deposits. Consumer confidence is on the rise. And Help to Buy is set to open the door to thousands more buyers over the coming months. "Make no mistake, the scheme is desperately needed by borrowers across the country, from Hampstead to Harrogate, from Wimbledon to Walsall. Borrowers everywhere want help. "There are plenty of wannabe buyers in London with decent jobs who cant possibly save for a 20% deposit without assistance.
The Help to Buy scheme is sensible. It isnt sub-prime lending. Rates on mortgages have been priced fairly high and credit checks are stringent. The real issue is a lack of house building." Andy Knee, chief executive of LMS, said the figures show there is not a bubble. "There are several reasons why house prices are continuing to rise. Not only are mortgage rates currently at their lowest level but high rents and low returns on savings mean that an increasing number of people are turning to property as a means of investment. First-time buyers are competing with buy-to-let landlords for a very limited supply of houses. Peter Rollings, CEO at Marsh & Parsons, said London now operates on an entirely different level to the rest of the country. "Annual price increases of 9% positively dwarf those in the rest of the UK, and in prime London this is even higher we have recorded an 11% increase compared to last year. Rather than create a bubble, we may find that Help to Buy actually stabilises prices by encouraging first-time sellers to put their properties on the market and take their next step up the property ladder.
But there are signs the property market is overheating, said James Hall, director of estate agents Fishneedwater. "Bidding wars are becoming an everyday occurrence in some areas of the UK, especially the capital. We're seeing a huge amount of pent-up demand hit the market at the same time. In London, a lack of supply continues to place upward pressure on prices."