House prices have increased at the quickest rate in three years, the Halifax has stated.The statement comes as statistics have been published that indicate that house prices have risen by a monumental 6.2% compared to this time a year ago. House prices have also risen by 0.3% in September this year compared to August, meaning that the average cost of a home in the UK today is £170,733.
The price rise has sparked fears about the affordability of property in the future and has raised questions about how young people today are going to be able to establish themselves in the property market.
However, the average price of a home is still 14% lower than it was in August 2007, which represented a high point for property costs in the UK.
Supply to meet the demand
The Halifax has attributed the higher cost of property to an increased demand for houses. This has apparently been sparked by mortgage providers offering improved interest rates and consumers being more willing to enter the property ladder again.
They also attributed the increase to the government’s recent property schemes, that have allegedly increased consumers desire to own a house.
Schemes such as Help-to-Buy and Funding for Lending have experienced a large amount of criticism from different corners but the Halifax is keen to highlight that they have had a positive role in the recent property market upturn.
The great worry has been that house building will continue to increase at a slower rate than the demand for property, which will artificially inflate the value of property within the UK. This would make it even more difficult for first time buyers and prospective property owners to purchase houses and would make the government backed mortgage scheme ineffective.
However, statistics indicate that property price increase is still far below the rate that was being displayed prior to the recession and the main increases are in areas such as London and the South East rather than the UK as a whole.
The Halifax also added that there have been recent indications to suggest that more property is beginning to surface on the market, which would slow down the increase in house prices.
“The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home, enabling more to put their property on the market for sale,” said Martin Ellis, housing economist at the Halifax.
The Halifax also noted that levels of house building have started to increase which we must hope needs to continue in order to prevent an overvalued and inflated value in the future.