UK house prices hit record level Posted by: melanie
House prices across the UK have risen to record levels, according to the Office for National Statistics. Prices rose by 3.8 per cent in the year to August 2013, up from 3.3 per cent in July.
Bien Media client Nicholas Ayre, managing director of home buying agency Home Fusion, comments: ‘House prices continue to rise so it is no surprise that first-time buyers are also having to pay more with prices 4.9 per cent higher than in August last year. For those worrying about a house-price bubble, this will only fuel those concerns. But record low mortgage rates generally mean that affordability is not an issue – yet. However, this is something that does need keeping an eye on and borrowers must ensure that they don’t overstretch themselves.
‘Mortgages may be cheap now but borrowers need to think ahead. Interest rates will go up at some point and could you still afford the mortgage when this happens? It’s important not to be too short-termist: a mortgage is for 25 years at least so don’t bite off more than you can chew.
‘Both Lloyds and Royal Bank of Scotland have reported high levels of interest from borrowers keen on using the second phase of Help to Buy but whether that will actually feed through to completions once borrowers have seen the rates available, and whether they meet the criteria for borrowing at such a high loan-to-value, remains to be seen.
‘Supply constraints are such that if Help to Buy really did take off then a housing bubble might be possible. If more flats and houses are not built, a significant spike in mortgage transactions could substantially push up house prices. But we are nowhere near that just yet. While the recovery in property prices in London continues apace, this is far from the case throughout the UK. It is also worth remembering that transaction levels remain very low compared with what they were at the height of the housing boom.
‘London continues to be a special case that almost needs its own house-price index, with no sign of a slowdown in price rises in the capital.’