House prices have risen for the 10th straight month in a row, taking the annual increase to 7.7%, the Halifax has identified. Over the course of the past month, property prices have increased by 1.1%, with the average UK house now worth around £174,910.
The Halifax has attributed the persistent rises a current lack of supply to meet soaring demands for property, likely substantiated by lower interest rates and the availability of mortgages at the moment.
They have warned that if prices continue to rise at their current rate then low income families risked being squeezed further.
However, chief economist of the Halifax, Martin Ellis, identified that there has been some positive figures for house building in the past month and outlined his belief that the current manner of proceedings would culminate in supply and demand balancing out.
“We are also seeing signs of a revival in house building, which should help bring supply and demand into better balance and curb upward pressure on prices over the medium and longer terms,” said Mr Ellis.
Funding for Lending redirected
Rising property prices in the past year have been the topic of much debate amongst economists, politicians and businessmen alike, who have all forwarded widely diverse theories about the direction of the property market at the moment.
Opposition politicians had previously warned that the government’s ‘Help to Buy’ mortgages and t he Bank of England’s ‘Funding for Lending’ schemes were inducing too much activity in the property market and was risking it ‘overheating’ in the future.
Similarly, many economists have argued that the ‘help to buy scheme’ in particular is causing an artificial inflation in property prices by increasing demand so highly. The danger, they have argued, is that this will price out the countries poorest from improving financially, and might force them to move out their homes when interest rates get higher again.
November marked the 10th straight month of price rises in the property market, with 2.1% of the annual 7.7% increase taking place in the last 3 months.
Despite the statistics and warnings given by politicians and property experts alike, the Halifax has highlighted that the housing market is still significantly far away from the levels displayed before the recession, with prices around 12% lower than back in 2007.
According to the Halifax, so long as further intervention isn’t taken in the property market, there was little risk of it ‘overheating’.
The Bank of England has recently taken measures to address any potential ‘overheating’ in the property market by refocusing their ‘Funding for Lending scheme away from houses and into small business lending.
Previously, the Bank of England granted banks and building societies large amounts of money on the condition they distributed them in the form of mortgages but it is understood now that they will be encouraged to reallocate the money to small businesses instead.
Bank Governor, Mark Carney, identified that propping up the property market was ‘no longer necessary’ and that it was an intentional change to prevent squeezed families being burdened anymore by an ‘overheated’ property market.
This, he said, would be damaging to the economy, and was something that he and the bank were keen to avoid. An overheated housing market would be a risk to the economy, he said, adding that prices were rising in many regions.