House Prices Hit New Record And Could Soon Be 13 Times Your Wage
Tue 29 Apr 2014
LONDON, ENGLAND - JUNE 03: A man looks at property details displayed in the window of an estate agent in Camden on June 3, 2014 in London, England. Figures from the Nationwide, the UK's largest building society, have shown that in the year to May, the annual rise in house prices was 11.1% which represents the greatest rate of increase in seven years. House prices have risen to a new record of 188,949 on average in July, Britain's biggest building society Nationwide has said, as Labour warn that prices could soar to 13 times the average wage by 2020. The cost of an average home will reach 359,000, which would require a 72,000 deposit, as the supply of new houses continues to trail behind demand, shadow housing minister Emma Reynolds warned. Speaking in Nottingham, she warned that 1.3 million homes were needed to satisfy current demand, with the number of houses needed at risk of ballooning to the size of Birmingham if supply fails to increase.
"While the Tories say the housing market is back on track, the truth is they've presided over the lowest level of house building since the 1920s," she said. "We're not even building half the homes we need to keep up with demand."The Tories claim to be the party of home ownership. But on their watch home ownership has fallen to its lowest point since 1987." In response, Tory housing minister Brandon Lewis said: "This speech from Labour just isn't credible. Here's one fact they won't tell you - under the last government Britain was building fewer homes than at any time since the 1920s. Labour's record on housing was truly appalling. "By contrast, house building is now at its highest for a number of years and we have already delivered over 445,000 new homes, including 200,000 affordable homes." Labour's attack on the coalition's record on house-building comes as nationwide research found that house prices had edged up 0.1% month on month across the UK, marking the smallest rise seen in 15 months. On a year-on-year basis, growth in values remained in double digits for the fourth month in a row, although the pace of the annual uplift fell back from 11.8% in June to 10.6% in July. The slowdown is a sign that stricter mortgage lending rules, under the Mortgage Market Review (MMR), which came into effect in April are having an effect.
Robert Gardner, chief economist at Nationwide, said the winding down of price growth "was not entirely unexpected, given mounting evidence of a moderation in activity in recent months. At least part of the slowdown in activity relates to the introduction of Mortgage Market Review measures."
Gardner predicted that the slowdown will only be "temporary" though, as "activity is likely to recover in the months ahead." He continued: "While there have been some encouraging signs that construction activity is picking up, the pace home building continues to run far below most estimates of what would be required to keep up with household formation in the years ahead." Nobel Economics Laureate Robert Shiller thinks so, and he predicted the 2007 house price crash. Ronnie O'Sullivan says a huge housing bubble (and crash) will happen. Or in his words: "Baby it's coming." The average price for a three-bedroom house in central London has increased by 729 a day over the last year, equivalent to a quarter of a million pounds, estate agency Marsh & Parsons said. The estate agent firm said the scale of house price inflation meant that prices rose by 19% since April 2013 to an average of 1.6 million, equivalent to 5,120 a week, or eight times Londoners' 658-a-week median salary. Less than one in ten properties in many parts of the UK are affordable to single house-buyers, according to the homeless charity Shelter. Meanwhile, three central London areas are completely unaffordable for couples with children or single people living on average wages: Kensington and Chelsea, Westminster and Camden It's JUST a garage. This tiny lawn in Chelsea sold this month for 84,000, and it doesn't have planning permission or right of way. It sold for 53,000 last September - and you can't do anything on it at all so says independent research commissioned by Shelter. That boy has already started on his first house... It's cheaper to commute from Spain than to live in London. Sir Jon Cunliffe, the Bank's deputy governor for financial stability, has warned that it would be "dangerous to ignore the momentum that has built up in the UK housing market." He also said that the housing market was the "brightest light" blinking on the dashboard of financial hazards that the Bank monitors. While arguing that Britain is not showing signs of a housing bubble, Broadbent admitted that it may be easier to spot with hindsight.