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Are house prices on the increase?

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With the recession still fresh in everyone’s minds, we’ve become more conscious of house prices. Following a dramatic decline over the past few years, a number of recent figures have shown that the market is starting to pick up. Is this a continuing trend and what are the reasons behind the increases?

What do the reports say?

There are different industry statistics that look at the price of houses and whether they’ve increased or decreased over a certain period. Over the past month, the majority of these have started to show some optimism for the housing market. Figures from the Royal Institution of Chartered Surveyors (RICS) for June illustrate that house prices saw their quickest increase since 2006. Prices in London rose by 8.1%, with the West Midlands and the North East seeing the sharpest increases with 14 year highs for buyer activity.

houses terraced london

The Office for National Statistics (ONS) also paints a similar picture in their latest survey results. Their figures for the year to June show a 3.1% rise; following a 2.9% increase in May. However, the picture is not the same across the country, with some areas still falling. Both England and Wales posted healthy increases, 3.3% and 4.3% respectively, but there was a 0.9% drop in Scotland and 0.4% in Northern Ireland.

Results from one of the country’s major mortgage lenders, the Halifax, are also positive. In the three months to July, they saw prices rise by 2.1% compared with the previous quarter. In July alone there was a 0.9% rise. Against the same period last year, house prices were up by 4.6%. The Halifax also saw overall transactions increase by 6% in the first six months of 2013. Their figures put the average valuation of a property at £169,624.

What has led to these house price increases?

In any housing market there will be periods of growth and decline. However, what can these latest price rises be attributed to?

Interest rates have now been at historically low levels for over four years. The Bank of England’s recent announcement on the conditions that must be met before rates would be increased has given a boost to the housing market. Under these terms experts are predicting that it will be around 2015 or 2016 before rates start to increase. This means that there is more confidence amongst buyers that their mortgages will be affordable and for lenders to agree better deals.

Government initiatives are also part of the reason for the boost to the market, with help for both buyers and lenders. The Help to Buy scheme was launched in April and government figures show that it’s already been responsible for 10,000 registrations. This scheme helps buyers looking to purchase a new build property with just a 5% deposit. They can then take out a government loan of up to 20% of the value of the property to make up the rest of the required deposit. In January, this will also be open to buyers of existing properties.

Girl moving house

The Funding for Lending scheme has also helped to increase the availability of affordable mortgages. This provides lenders with cheaper loans if they then make the money available to businesses and individuals. It has already led to an increase in the amount of money banks are willing to lend against a property – the loan to value ratio.

It’s too early to tell whether these increases will be sustainable. However, all the signs point to a greater confidence from all parties, which should provide welcome relief after the long term decline.

 

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About Catherine Stern

About Catherine Stern

Catherine Stern is a freelance writer with a background in marketing and PR. She currently writes web content on a range of subjects, from finance and business to travel and home improvements. As a working single mum of two young boys she understands the pressures that today’s working parents face and the topics they want to read about.

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