Did you know the average house in Britain will be worth £220,000 this year? Increased from £211,000 in 2016 thanks to the shortage of property which in turn is driving prices higher.
The prediction for 2017 is that prices will rise 4.4%, which is the lowest price increase since 2013. Between 2013 and 2016 we have typically seen prices increase between 6% and 8% per annum.
The average house in Britain will be worth £220,000 this year – up £9,000 on 2016 levels – as the property shortage continues to drive values higher.
The slowdown is due to a combination of pay rises failing to keep in line with inflation along with an uncertainty of the Brexit vote weighing heavy on property, not to mention the stamp duty applied on second homes.
Worries will ease over the coming years with the average UK property expected to be worth £272,000 by 2021.
The biggest driver in price increases is the continuing property shortage.
The Government are saying that 40% of local planning authorities are genuinely concerned as to how they will meet the housing demand over the next 10 years. The market is proving to be buoyant, with mortgage approvals closing out at just below 70,000 a month which is very close to the post-crisis high of 74,000 in 2014.
After the financial crises, the Bank of England introduced new interest rates which were set at record lows. These have been further reduced in the wake of Brexit to just 0.25% which in turn have helped to prop up the property market, namely due to the cost of mortgage repayments being low.
Transaction numbers are recovering from the point in which the stamp duty surcharge was introduced on second homes in April 2016.
Even though still have low mortgage approvals by historical standards, the low interest rates are making mortgages more attractive.
Though all being said, we are not out of trouble yet, another threat to house prices is inflation versus the stagnating wage growth. This is a major problem as the value of our money is being eroded, yet our salaries are not increasing.