Exploding House Prices Are Set to Cost Buyers 13% More to Get on the Property Ladder

The value of property is now 12.1 per cent higher as compared to similar periods in the previous year, putting a stamp on the fastest rise in a single year since 2007, as shown in the latest index from the Office for National Statistics.
It means that the average price for a home is now £273,000 ñ and increase of almost £30,000 from the recorded £245,000 in September of 2013.

From a monthly perspective, house prices have increased by roughly 0.5 per cent between August and September, a lower uplift than the jump of 0.8 per cent as recorded within the last index.

Although these increases have occurred, September has witnessed the prices of homes in a number of regions fall backwards from the high levels recorded in August, according to the ONS.

Now only the prices of homes within the East of England remain at record high levels.

Despite this, there are numerous areas which possess house prices which are much higher than they were during the pre-crisis peak. In London for example, the index is 37.9 per cent higher than the levels that were recorded in January of 2008.

Prices are now sat in the capital at £508,000. The North East possesses the lowest average home price at £154,000.
Meanwhile the East and the South East possess prices which are greater than the average within the UK of £273,000 (this is excluding London and the South East).

The ONS figures have been shown that house prices have been steadily increasing for some time, although these figures are said to lag about one month behind other indexes, so they may not fully reflect any slow-down.

David Newnes, the director of Your Move Estate Agents and Reeds Rains has said:

‘Recent hiccups in the market have not shaken the overall underlying stability.

‘Zooming in on the regional footprints unearths a more complex path of growth ñ as the recovery continues to advance with a Southern-leaning slant.

‘If we omit London and the South East from our calculations, a milder annual change in property prices emerges. Yet at the very top end of the housing market in Prime Central areas of London, growth is subsiding.’

Other sources estimate that the usual first-time buyer will need to face having to pay 13.3 per cent more to get themselves onto the property ladder than they would have needed to a year prior.

This is the greatest yearly increase for first-time buyer since March of 2005, when prices soared by 18.3 per cent throughout the year.

The average amount paid for a home by a first-time buyer was £209,000 in September.

Tougher rules for lending have come into force throughout the industry in April as a consequence of the Mortgage Market Review, which has caused a shake-up in the housing market.

Rightmove has said that sellers have been reducing their house prices in order to tempt in buyers during the quiet months of winter, with areas located outside of London making the biggest reductions.

However, in recent weeks lenders have unveiled some of lowest mortgage rates ever as they strive to meet their targets by the end of the year.

Concurrently, the swap rates which have an influence on how lenders price their mortgages have been falling as well.

The chief executive of SPF Private Clients has said:

‘ONS figures show there is still plenty of momentum left in the market’.

adding that:

‘Swap rates remain low and lenders are keen to make up for lost ground caused by implementing the MMR. As a consequence, there are some excellent fixed and tracker rates available.’

Rises in property prices have been good news for those who are looking to remortgage.

The Mortgage Advice Bureau has said that homeowners who remortgaged in October had on average $140,611 of equity, compared with only £111,783 in October of 2013 ñ an increase of almost a quarter.

While this is happening, there has been an increase in remortgage applications by 17 per cent since September and an annual increase of 34 per cent. This suggests that equity gains are giving homeowners and incentive to look for a better mortgage deal.

Indeed, Brian Murphy the head of lending at MAB has commented:

‘House price growth has often been billed as a cause for concern over the last year, but for many of the UK’s homeowners the recovery has delivered a long awaited boost to their housing equity.

‘Recovering property values are giving many the leverage they need to negotiate a better mortgage deal with lower monthly repayments, so it’s unsurprising that remortgage applications are rising as a result.’

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