Higher House Prices in UK Could Force a Rough Correction in Market
The UK housing market may possibly go through a rough correction as current high level prices are closing out many hopeful home buyers according to a research firm. This information follows other reports that have warned house prices will continue climbing steadily in the year and for the next five years as well. According to the ONS, the average house price was £302,000 in November. This is a 50% increase from the previous decade.
House prices remain extremely high in London, which never fell into a decline during the recession. The average house price in the capital is £537,000, which is a 90% increase from 2005.
The average pay growth in England was just 23% for the decade to 2015 and only 19% in London for the same time period.
The supply of properties coming onto the market remains extremely low in comparison to the strong demand from homebuyers.
Economists have forecasted an increase in the average house price to range from 2% to 4% over the coming year. Yet, it could go higher as demand remains strong and supply tightens.
Home buyers may have low interest rate deals available from lenders, but at the higher price levels deposits remain elusive.
Once warnings become stronger of the Bank of England increasing the standard base rate, demand will grow as buyers seek to take advantage of the cheap rates. The same should occur by homeowners as they grab cheap remortgage deals – or at least they should, as experts encourage them to prepare soon for rising rates.