Nationwide have announced that house prices in the UK are now rising at a faster rate than they were in July last year. Their recent figures show an increase of 3.5% on the same period in 2014.
Nationwide also stated that the annual increase in house prices was up from 3.3% in the month before. From June to July house prices rose by 0.4% – meaning the average cost of a UK home rose to £195,621.
The report stated that the increasing demand for housing should be viewed as “encouraging” but it was still “unclear” as to what should be made of the strength of the supply.
Robert Gardner stated:
“The number of new homes under construction has started to pick up, albeit from historically low levels, and further increases are required if a sustainable recovery in the housing market is to be maintained over the longer term.”
He went on to add that the growth in house prices may be “stabilising close to the pace of earnings growth” – traditionally stationed at an increase of 4% annually.
One of the largest barriers to this increase may be the expected rise in interest rates – predicted to be coming at some point in 2016.
“The one blot on the horizon is a potential interest rate rise, which may slow down the mainstream market as buyers become concerned that their mortgage will cost more,” said Jonathan Adams, director of estate agency Napier Watt.
“Buyers often do not realise the impact of a rate rise until the first one actually happens.”
Nationwide have also been looking into what impact the new stamp duty regulations have been having on the market. Their research suggest that around £275 million less tax has been paid since the changes were introduced – due to the duty now only being paid on properties that are situated within a certain bracket.
It is believed that in the time since the revisions were brought into force almost 230,000 property buyers had paid an average of £1,800 less than they would have under the previous system.
“The benefits are greatest in the South of England where average house prices are higher,” Mr Gardner said.
“We estimate that around 85% of transactions in London, the South West of England and South East of England have benefited from the changes, compared with around 55% in the North of England, Yorkshire and Humberside, and the North West of England.”
It is also believed that around 5,000 people have paid more on stamp duty than would have been the case before the rule change. The amount paid increased by an average of £28,000 and two thirds of these purchases were made in London.
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