UK house prices have started to rise, indicating that there is increased confidence in the UK housing market. Higher house prices generally means that more people are buying and selling, and more mortgages are being bought or extended. A large part of the UK retail banking sector is driven by mortgages.
Biggest jump in 6 years
Recent rises are the biggest seen in 6 years. Demand is on the up. Average property prices across England and Wales increased by 0.5 per cent in September, the highest single month gain since May 2007 – before the global economic crisis struck home.
“Help to Buy”
David Cameron announced that the second phase of the “Help to Buy” initiative will be launched very soon. This scheme aims to help house buyers to get on the property ladder. However, Chancellor George Osborne has made a request to the BoE to ensure this scheme does not result in a housing boom. On the back of this request several housing stocks, including Persimmon, fell last week.
For the last few years much of the growth in house prices has been in London only, with the rest of the UK being stagnant at best. However, that trend is now changing, with more sales reported beyond London.
“Over the last few years, the housing market has been split between a buoyant London, boosted by overseas demand, and a trend of falling prices across other regions,” said Richard Donnell, director of research at Hometrack. “Now we are seeing continued house-price growth in London combining with modest gains across other regions and creating a picture of a broadening market recovery.”
The Bank of England reported this week that September saw a rise in new mortgages, with 62,226 new mortgages approvals, compared to 60,914 in August.
For many areas outside London there has been no growth in house prices for half a decade.
We are seeing more risk in the equity markets (although curbed by the recent European political issues in Italy) and more risk in the housing market too.