House prices continue to soar

Posted by Kevin Pearce in Mortgages on 31 March 2016 - Kevin is a Senior Credit Analyst at checkmyfile

House prices are continuing to soar, as properties across the North and West of England drive the market and push up prices in multiple regions. For once London is not responsible for this surge, which is currently experiencing mixed results of growth and decline.

The average house price in England and Wales is now over £300,000 for the first time - almost 50% higher than a decade ago.

Peak house prices in March followed the same trend across six regions; London at £644,045, the South West at £292,251, the South East at £399,680, the East of England at £326,836, the West Midlands at £204,140 and the North West at £177,437.

It seems that the market is pushing properties even further out of the reach of the first time buyer, with many struggling to find sufficient deposits in the face of tighter mortgage criteria and increased down-payment requirements.

If the average wage were to increase, house prices could escalate even further as property-hunters attempt to outbid each other to secure the sale.

Buy-to-let investors may have also contributed to the situation as they rushed to beat the stamp duty increase, which will rise by 3% from 1st April, although this is only going to have a short-term impact, as Howard Archer, chief UK economist at IHS Global Insight, comments, “This could well exert upward pressure on house prices in the near term.

“Post-April, this move may modestly dilute housing market activity and upward pressure on prices.”

Existing home owners looking to up-size may at first relish the increase in equity, but when they realise that property values have increased in so many areas, they may think twice about moving.

This rapid growth is likely to be unsustainable but if interest rates are increased, those that are already financially stretched could see themselves struggling to meet their existing commitments.

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