House prices in the UK are continuing to rise and much of the blame is due to a shortage of new properties coming into the market. Just as with any other market, when demand out paces supply the result is that prices increase. According to the house price report for August from Halifax the average house price rose by 1.1% to £222,293.

In the three months to August, the average house price was 2.6% higher than last year for the same time period. The annual rate is up 2.1% over the three months to July, which offered the lowest level in four years.

Another factor in the continued strength of the housing market is the low unemployment rate which recently fell to a 42 year low. As consumers hold on to spending confidence they will be more likely to make large purchases and investments into home ownership.

Halifax managing director Russell Galley, remarked, “Recent figures for mortgage approvals suggest some buoyancy may be returning, possibly on the back of strong recent employment growth, with the unemployment rate falling to a 42-year low.

“However, wage growth is still lagging increases in consumer prices, which is likely to add pressure on household finances and increase affordability challenges for some buyers. House prices should continue to be supported by low mortgage rates and a continuing shortage of properties for sale over the coming months.”

Mortgage lending is expected to continue to see strong demand as hopeful home buyers seek to climb onto the property ladder with a low interest rate deal. Many are heeding warnings that low interest rates are not the norm and will eventually rise. Strong demand from homeowners for remortgages is expected as well. More borrowers are being able to take advantage of the opportunity to borrow at historic levels and secure their financial future with fixed rate deals. For those hopeful homebuyers looking for a mortgage and homeowners shopping for a remortgage the time could be practically perfect for getting a great deal while interest rates remain low.