The Current State of the UK Property Market
The United Kingdom property market has had its ups and downs. In 2012 we saw the expected slight upturn with many obstacles and hurdles. However, within the matter of one year the property market has gone from complete stagnation to increasing fear of an emerging housing price bubble.
The dramatic housing turn around has produced some very encouraging numbers. In 2013 the UK property market has seen an annual inflation of 5.8%, the highest in 3 years. The average home value has risen by £5,532 over the past year according to the Land Registry and the prices on the market have risen by 6.84% with an Average UK House price at £221,415 as of October 2013, for more information on UK House Prices take a look at the House Price Index. For people that want to sell their home sellers are receiving 95.2% of their asking price, which is only second to the 2007 property boom where sellers received 95.7% of their asking price.
In general property prices have risen but with a north south divide with inflation being 0.6% in the North West to a substantial 9.3% in London. The total number of property sales is a significant 171,378 and the market has seen more buyers because of increasing lending and 5% available deposits on mortgages.
The Future and Fear of the UK Property Market
The future of the UK property market has a silver lining. The predictions for the future include housing prices rising by 25% and even more in South and South East of England with expected price rises up to 31.9%, according to Savills Estate agents 5-year prediction report.
The property market is a foundation of the UK economy so the upturn in the 2013 property market shows positive signs of growth and the 2013 figures signify a substantial rise in house prices and sold values which reflects a higher buyer and seller confidence.
However, fears of a real estate bubble repeating could lead to more stagnation in the UK’s property market. Property transactions remain down more than one third compared to the 2007 property boom. Figures from the Land Registry showed that the average monthly transactions from April – July 2013 were at 62,034 which is up 16% from the year before but still significantly below average or the 100,000 monthly transactions of 2007.
It Still may be Difficult for you to Sell Your House Quickly
In the short term the housing revival is certainly a good thing for the UK economy; especially because when people move into a new home they invest in home décor and appliances, which stimulates the economy. However, the fear of a housing bubble might be justified with a longer-term outlook. A return to the pre-crash above inflation property prices could cause economic problems. Housing markets are historically high relative to wages and although mortgages have become affordable, there will come a day when they must rise – which has the potential to result in yet another bubble bound to burst and leave property owners with mortgages higher than their property is valued and possibly in negative equity.
The positive fact being, lenders are learning from their past mistake to prevent another crisis and have made it much harder for people to take our cheap interest-only loans. Although this might be seen as a stumbling block for the property-market it will help prevent another crash.
The increasing confidence means that prices will continue to rise, however, if you are purchasing you should accept that if confidence potentially declines than real-estate prices could fall by as much as 10% over the next 2 years. When you are asking yourself if you should buy property then consider if you are getting a good deal at a good rate, how long you plan on owning the home, and if you can afford it.
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