House prices have risen for the 9th consecutive month, data from the Halifax has indicated.A recent increase in demand has been forwarded to account for the price rises with national property costs rising by 0.7% during October this year.
This means that the average house in the UK is now valued at £171,991, marking a 6.9% increase from last year. Despite the increases, the Halifax has moved to allay fears about a potential ‘housing bubble’ by highlighting that property prices and sales were still vastly far away from the levels experienced before the recession back in 2007.
Property prices are expected to continue to rise in the upcoming months as the market continues its recovery following years of downturn since the recession.
The data, derived from the Halifax’s personal statistics, indicated that property prices had risen by 1.6% in the last quarter, compared to costs during the 2nd quarter of this year.
They cited a rise in demand from potential purchasers as the primary reason for rising prices, as well as pointing to the lower and more competitive interest rates being offered by mortgage providers at the moment.
“Low interest rates, and higher consumer confidence supported by the increasing evidence that a sustainable economic recovery may now be underway, are helping to increase housing demand,” said Martin Ellis, housing economist at the Halifax.
Mr Ellis also said that the recent upturn illustrated a return in consumer confidence to the property market, and identified that more property would be accessible as a result in the upcoming months.
The statistics come after an intense period of debate about the government’s recent implementation of its flagship Help-to-Buy housing scheme.
Under the 2nd phase of the scheme, consumers only have to pay a 5% deposit on their desired house, worth up to £600,000. The government also guarantee’s 15% of mortgages given out by banks as a form of insurance for lowering the deposit requirements for property purchase.
However critics have argued that the rate of house building will be unable to keep up with the increase in demand, and as such will cause an artificial inflation in housing prices, resulting in a ‘bubble bursting’.
However, prominent house builder Persimmon made a statement this week that highlighted that the levels of house building had increased dramatically in the past few years, with the first phase of the government’s Help-to-Buy responsible for the improvements.
Speaking on Wednesday, Persimmon identified that it had managed to sell over 3000 builder homes in the past 6 months, due to the equity loan scheme implemented back in April.
The rise in prices will undoubtedly be compounded on by critics of the scheme, who will point to the annual increase in property prices as evidence that a ‘housing bubble’ is a genuine reality.
Last week, Nationwide Building Society reiterated these sentiments, pointing to the sharp increase this year as proof that the property market should be regulated more closely.
However, the Halifax has hit back, highlighting that prices and sales remain nowhere near as high as the peak back in 2007, when the property market swiftly capitulated.
Many market experts have also identified that the real problem with property price rises is in London, and that the scheme was positively impacting most other areas in the UK.
“In many areas of the UK, as the Halifax reminds us, house prices remain significantly below their 2007 peak. In some areas, they’re still falling. For anyone inside the M25, this is easily forgotten,” said Joseph Murrock of estate agent Wesold.co.uk.
“London is at risk of overheating, few can realistically deny that, but what is happening in the capital is hugely distorting the image of the broader UK market.