House prices are rising at their fastest pace since 2010 primarily because of an increase in the number of first-time buyers, as well as a sharp fall in the number of homeowners defaulting on their mortgages.
Latest figures from Halifax show there was a 5.4 percent increase in the average value of a home (£160,292 to £170,231) when compared to 2012. Figures from LSL Property Services also show 26,100 first-time buyers entered the market in July (45 percent increase when compared with the same month last year), making it the highest number since 2007.
At the same time the number of borrowers who have been unable to keep up with their mortgage repayments has also declined by 40 percent since the peak of the economic crisis. Analysis found the value of mortgages written off for the year ending in March was £543million when compared to £902million five years ago.
Government initiatives to support the property market include the Funding for Lending scheme, which made £80 billion available to banks for loans. April this year saw ministers launching the “Help to Buy” scheme too, whereby 20 percent of a new-build property’s price is lent by the government interest-free for five years.
Buyers however have been warned not to over-stretch themselves, as interest rates will invariably rise and the bubble may burst before it’s even started to rise.