What can we expect from the housing market?

The UK’s housing market has been in a state of flux for a number of years, with property prices both rising and falling, and a number of groups still facing difficulty in getting on the first rung of the housing ladder.
Now it seems that the UK’s housing market could be tipped for a boom, after figures revealed that house prices have leapt by nearly £10,000 in the last year alone, reflecting the wider recovery in the economy. GDP grew by 0.7% between May and July, according to figures from the National Institute of Economic and Social Research, more than doubling the 0.3% growth in the economy in the first quarter of the year. With experts in the industry arguing that schemes such as Funding for Lending and Help To Buy are behind the rise, and the latter due to be extended in January 2014, it seems that the upward trend in house prices may continue for some time yet. Here are some of the latest developments in the housing market.

House price rises won’t be welcome news for first-time buyers

While current homeowners may welcome the news that house prices are continuing to grow, this may not be welcome news for first-time buyers who have traditionally struggled to gather the finances they need to secure their first home. This view is shared by property economist Matthew Pointon, of Capital Economics. He said: “Evidence that house prices are in the midst of a steady recovery continues to accumulate, which is bad news for first-time buyers.”

Figures also show that the gulf between house prices and income levels is widening, with house prices now equalling 4.62 times the average earnings, compared to 4.34 times average earnings in July.

Rising prices leading to more buyers paying out stamp duty

With the average cost of a home hitting £169,600, it seems that more homes are being pushed over the stamp duty threshold of a property value of up to £125,000.

Research has revealed that quarter of buyers in England and Wales are stumping up £7,500 or more in stamp duty. However, with the average cost of a three-bedroom semi now coming in at £253,000, it seems that families could be worst hit by stamp duty costs. The higher rate of stamp duty of 3% applies to properties in the £250,000 to £500,000 price range. Figures show that 182,692 of the 723,829 homes bought in 2012-13 were subject to a stamp duty rate of 3% or more.
Alexander Gosling, of online estate agents House¬simple.co.uk, argued that action must be taken to address this issue. “An overhaul of the grossly unfair and outdated stamp duty system is urgently needed. The punitive jump in stamp duty from one to three per cent is now hurting the average person.” This view was also shared by Miles Shipside, commercial director at property analysts Rightmove, said: “As well as helping buyers get mortgages through the Help To Buy scheme, the Government could consider a stamp duty overhaul.”

Is Britain headed for a property price bubble?

With house prices rising at their fastest pace for three years, rising by 4.6% between May and July compared to the same period last year, some in the industry have expressed fears that the UK is heading towards a property price bubble. However, this idea has been rejected by Martin Ellis is a housing economist at Halifax. He said: “It is premature to say that we are seeing the formation of a house price bubble. What we are seeing is the impact of improved property market sentiment.

“Confidence has been boosted recently by encouraging signs in the economy, government housing initiatives such as Funding for Lending and Help to Buy, evidence of growth in UK GDP, and a reduction in unemployment.”

Posted by: Samantha Turner-Meyern Categories: Buying, Buying Property, Environment, Estate Agents, Finance, House Prices, Industry News, Latest News, Property Advice, Property Market, Property News, Selling Property Tags: , , , , , , , , , , , , , , , Comments Off on What can we expect from the housing market?

0 Responses to What can we expect from the housing market?

  1. avatar Dan says:

    Although this artical is some what good news for home owners. Surely the fast pace rise in property the market is unsustainable? I am in my early 20’s and living on a very tight budget in order to maximise savings, those savings I am investing and so far getting a far more reasonable return when compared to what banks give you, even if you lock in for 2 years! However by the time myself and my partner have the deposit (2014 Q4), this article is telling me that the property market has moved on so fast that our target becomes out of reach. I think I would be safe in saying that we are not the only people in the same boat. So, if people can’t afford to get on property ladder unless its attached to a scheme which is generally based on new build developments, surely that people wanting to move up the ladder and sale there starter homes for the ‘next size up’ are stuck waiting for a buyer to come along. People will surely be reducing their asking price which will infact have a knock on effect across the market. I would see this as a bubble growing to bursting point. Interesting to hear others views on this as you could say, I’m fairly new to the property market however I have tried to study it hard and look at a broader picture as our first home will be our biggest investment, and like any investment – you wouldn’t want to loose money!

    • avatar DC says:

      Dan, the best investment potential surely lies within property so if at all possible I would try to get whatever property I could afford at present and use that as the investment vehicle, otherwise you are always going to be chasing the market (until the next crash!).

  2. avatar J White says:

    We are on the market, sensible price afterv10 yrs of a total refurb’.
    Relocating to Hampshire from Weybridge Surrey, pitches Agents suggest to Vendors in Hampshire is plain crazy in relation to Surrey where we are only 1/2 hr from Cnter of London.
    Do the Vendors drop price to a sensible level , no they don’t & won’t !
    We, therefore can’t afford to drop ours as it seems no one is willing to do likewise, result , no one sells and no one can move!!
    Asking prices in Hampshire are so crazy that one is unable to make an offer as they are generally £10000/ plus overpriced to begin with,
    No we aren’t looking at 6 bed houses with land , only 2 bed cottages ! Come on , the ‘Big Name ‘ Agents are the worst at overpricing property in Hampshire and their clients then think they are being screwed when a very reasonable offer is put to them by ignoring the asking price altogether , most offenders are also greedy ‘inheritors’ , boy do they want as much as possible for nothing !!

  3. avatar J White says:

    Sorry all,
    Prices over the top by £100k Not £10k as my previous comment !!
    Yes , one is asking £77000, 2 beds( on market forever and will remain so. Other one £675000!
    Mad , greedy or both ? Not sold, won’t sell but no one wakes up and smells the coffee either!!
    Worst over pricing Agents usually begin with S !

  4. avatar Arthur says:

    Its my second year I’m trying to get on property ladder. Looking for a flat in London( anywhere from zones 2 to 6) is like banging head against the wall. My earnings of circa 39k allows my for 150-170 k mortgage leaving me with 30 k or even 50k deposit. I have got wife and little baby so I’m the only source of income. Sounds good with gov loan but we end up with 2 big credit bills one we own bank roughly 1200 a month and loan you have to pay it back to government. I’m 27 and can’t see happy ending