In August the rate of growth with house prices rose to 5%. This is in accordance with recently published government figures. With rising inflation already taking hold, purchasing their own home moved further out of the grasp of aspiring first time buyers.
According to the Office of National Statistics (ONS) the average price for a house in the UK in August rose to £226,000 which is up by £1,000. The annualised rate of house price inflation which was up from 4.5% in July to 5% in August and used to calculate the increase. Pay settlements across the country are less than half of this.
High price increases in some Regions
The Northwest of England experienced the largest increases and were up by 6.5%. There was a 6.4% rise in the Southwest of England, the East Midlands and the East of England. The lowest regional increase occurred in London at only 2.6%.
There is a real difference between regions for the price of property in the United Kingdom. The cheapest region to buy a house right now is Blaenau, Gwent where the average house price is £82,000. Contrast that with the highest region, Kensington and Chelsea in London, where the average house price is £1.2 million.
Experts in the property market said that the continual rising prices were due to the insufficient building of houses. There are fewer properties available for buyers to go for and the overall lack of housing stock means that the demand is high and so are the prices.
Buy to let market could be Impacted
This has even impacted the buy to let market who are normally in favour of house prices being higher. A spokesperson said that when inflation rates are taken into account a lot of younger people are finding themselves excluded from the market.
Yes mortgage rates are pretty low at the moment but this is only useful if you have a sizeable deposit to play with. For young people trying to get their foot on the property ladder the rising prices will just set them back.
What happened to Affordable Housing?
There was criticism of the government too. It needs to maintain its focus and address the country’s housing crisis. It has promised to build thousands of affordable homes for people who really need them so where are they?
In London house prices are falling in real terms. Today’s inflation figure is 3% and a 2.6% increase in house prices means that the capital is falling behind. Some argue that the uncertainty of Brexit is responsible for this fall, as there is deep concern over the future of international businesses that are located in London.
The future does look bleak for First Time Buyers
It is not likely to get any better any time soon either. The mortgage rates will be rising and the Bank of England keeps talking about an interest rate hike so that they can tackle the inflation problem.
These factors will certainly have an impact on future house prices and will cause even more concern for young first time buyers. There has been evidence already of mortgage rates rising as some lenders have already increased their prices for 2 year and 5 year deals on fixed rate mortgages as they anticipate the official interest rate rise.