Halifax’s latest house price index has revealed that property prices have risen at the highest rate for three years over the second quarter of 2013. It is estimated that the average price from May to July was £168,226, a figure that saw an increase of 4.6 per cent from £160,903 from the same quarter in 2012. Month by month, the increase was calculated at a figure of 0.9 per cent, and does not appear to be slowing as the market enters one of the historically busy periods of the year.
The start of the summer usually ushers a wave of activity, and this year has been no exception. The statistics linked to house sales showed that 495,000 properties changed hands in the first half of the year, with an increase of 6 per cent against 467,000 sales that took place in the same half of 2012.
On behalf of Halifax, housing economist Martin Ellis linked the improvements to a perceived change to the state of the economy: “Signs of improvement in the economy, underlined by the recent evidence of a rise in gross domestic product in quarter 2 and increases in employment, appear to have boosted consumer confidence. Greater confidence is likely to have underpinned the increase in housing demand.”
Although this may all come as a promising sign that the economy is improving for the first time for several years, there are fears that the sudden surge in house prices could create a bubble effect for the market. Many market commentators have noted that the increased property values show a worrying trend, as the figures are far in excess of the average household earnings for the UK. And many have pointed to the Governments Help to Buy scheme as a major catalyst for concerns over a future market crash.
While the scheme was launched this year for those qualifying buyers looking to buy a newly-built home, the scheme is due to broaden from early 2014 to incorporate buyers looking to purchase older properties, if qualifying criteria is met. The major concern for many sceptics is that the Government backed low-deposit funds, estimated to total £130 billion, could push prices further up as sellers look to capitalise on a buyers ability to stretch themselves.
London continues to drive the average home price up for the UK, and estate agents in the capital have not missed the opportunity to take advantage of the fact. Simon Butler of Contractor Mortgages Made Easy noted a worrying trend that has begun to appear in the market: “Several clients have recently informed us that the selling agent has been to see the vendor in order to suggest that they could in fact sell their property for a much higher figure, after a sale has been agreed. This has resulted in several situations where clients have had to increase their offer, even as far down the line as at the point of exchange.”
It has also been reported that estate agents are proactively encouraging sellers to allow group viewings for properties, as the theory that multiple interest will tempt bidders to offer above market value to secure their dream move has continued to bear fruit.
The most concern with these changes lies with first time buyers, who may again be shut out of the market. During the early part of the second quarter lenders appeared to be actively embracing this area of the market, with Halifax introducing a stamp-duty paid selection of products to aid would-be buyers. However, continued sharp increases may continue to prevent first-time buyers from entering the market, which could adversely delay any further improvement.
Property search website, Rightmove, has this week reported that 60 per cent of people they surveyed that currently rent say they feel ‘trapped’, because they feel buying their first home is impossible. Under a third of those surveyed said that they had previously owned property, but had to move back into rented accommodation due to the poor state of the economy.
Article By: Jon Shields, Media Executive at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 01489 555 080