House prices continuing to accelerate
03-08-2014
The latest Halifax House Price Index has confirmed that house prices are continuing to accelerate, with them rising by 2.4% in the last month alone – meaning the average UK property now stands at £179,872.
Prices have now risen for the 11th consecutive month and on an annual basis it seems they're growing even more rapidly, with them increasing by 7.9% year-on-year. In fact, in February 2013 the average home cost £163,468, meaning homebuyers now have to find an additional £16,400 just to put an offer in – good news for sellers, but perhaps not so good for those trying to get on the ladder.
The reasons behind the rise
These rising house prices are largely the result of ever-increasing demand, with the supply of properties on the market not being high enough to accommodate. New buyer enquiries have been outstripping the number of homeowners putting their properties for sale, and increased competition for fewer homes means prices are inevitably going to rise.
Arguably, this has been fuelled by the Government's Help to Buy initiative, which has been encouraging more people to get on – or move up – the ladder. Without a decent supply of new properties to fulfil the level of interest it means many people could be disappointed – or could find themselves paying even more than they'd hoped.
Other factors could have had an impact too, as Stephen Noakes, managing director of Halifax mortgages, says: "Several factors appear to have boosted demand, such as the improved economic outlook, unemployment falling faster than expected, improvements in consumer confidence and low interest rates."
Will prices only get higher?
While there's no indication that price rises will slow down in the foreseeable future, with there even being fears that a bubble could form, there are hopes that in the medium-to-long-term prices will be somewhat constrained.
"Continuing pressures on household finances, as earnings fail to keep pace with consumer price inflation, are expected to remain a constraint on the rate of growth of house prices," said Stephen Noakes, with the revival in housebuilding also offering a positive sign that supply and demand could start to balance out and curb upwards pressure on prices.
This is backed up by figures from the Department for Communities and Local Government which found that the number of new housing starts increased by 24% in 2013, boosting supply and ideally ensuring demand will be better catered for over the next few months.
Increased activity in the mortgage market
As might be expected given the state of the housing market, mortgage and sales activity have also picked up. Figures from the Index show that home sales increased for the ninth successive month in January and were 30% higher than the year previously, while the number of mortgage approvals was 42% higher.
Given that the UK has currently got such a buoyant housing market, it's no wonder that such good mortgage deals can be found. Lenders are increasingly trying to compete for your custom and as such are offering fantastic rates, and the more you've got to put down as a deposit the better the deal you'll be able to find.
What Next?
Check out our pick of the best deals then use our mortgage calculator to see what your monthly repayments could be, and make the most of the market by finding your dream home before prices (potentially) increase further.