Halifax Report Show’s a fall in UK House Prices
Halifax reported a drop in UK housing prices in December 2013, for the first time since January 2013. U.K. housing prices increased significantly in 2013 averaging more than a 5% monthly increase per month and a 6-year high of 7.7% in November. However, A Halifax Report released at the beginning of the year showed a decline of 0.6% in December, the first decline is housing prices since January 2013. For many, the drop in housing prices comes as a relief to the fast-rising housing market cost across the U.K.
The Halifax report contradicts their competitor, Nationwide, whose data reported a 1.4% increase, bringing the yearly increase to a significant 8%, the highest since 2010. Although there is debate over the final cost of December’s housing prices, economist, mortgage lenders, and potential property buyers and sellers are in agreement that 2014 will see another housing price increase of above 5%.
More People are Now Motivated to Sell their House
The rise of housing prices comes as a result of declining unemployment, moderate economic recovery, and the Help to Buy mortgage scheme. These factors lead to a great likelihood that 2014 will bring eager buyers and motivate sellers to put their property on the market to sell their property fast.
As economic recovery becomes stable, unemployment declines, and Help to Buy makes it possible for individuals to secure a mortgage on a 5% deposit, the worry of another housing bubble subsequently increases. A report from the Central Bank shows that there have been more approved mortgages in 2013 since 2008. The desire to buy a new home across the U.K. is exceeding the supply of new homes, which is driving up the price of affordable homes, and thus increasing monthly mortgages.
Halifax remain Optimistic for 2014
Halifax is optimistic that housing prices will be kept under control by external constraints such as slow wage growth. Halifax said the average home of a property for sale was 173,000, which is almost 5 times more than the annual wage of a full-time employee and as demands on household budgets and wages failing to keep up with inflation will inevitably prevent demand from severely exceeding supply. Furthermore, the high property prices should encourage property owners to put their property on the market.
The 0.6% December decline reported by Halifax in housing prices is not expected to be insight to the housing market trends of 2014. The U.K. widespread housing prices increase in 2013 is expected to continue throughout the year in 2014 and as this comes as good news for avid sellers and sign of economic recovery, it also comes a red flag for those worried about another housing bubble.
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