Housing prices went up once again in November, and by the fastest rate seen in over six years. Indeed when compared to the same period last year, prices increased by 7.7%. This figure covered the three months leading up to November.
Month on month Nationwide said prices had gone up by 0.6%. This means the figures are getting ever closer to where they stood during the peak in 2007, before the housing bubble burst and the recession kicked in.
Several reasons for the rise
A few different reasons have been given for this turn of events. The Help to Buy scheme provided by the government to kick the housing market into action has been given as one of them. However it is not the only one. Prices have also been seen to rise considerably in the London area, as well as the South East. Prices have not risen uniformly across the country, which means some areas are seeing far more in the way of rises than others.
Are changes in store?
The Bank of England has already announced its plan to remove the Funding for Lending scheme that has helped to trigger more interest in the housing market. This will be switched to support small businesses instead. This particular scheme has been seen as a major reason why the housing market has perked up, so perhaps when it is withdrawn the situation will change.
The Governor of the Bank of England, Mark Carney, has also sent out a warning to house buyers about the importance of making sure they can afford their mortgages. In an interview with The Guardian he pointed out the importance of making sure house buyers could still pay their mortgages if interest rates went up again. House prices may be rising at the moment but there is no guarantee they would continue to do this. Counting on them to do so to free up some capital in the property if the mortgage did become hard to pay is not the path people should be taking, according to Mr Carney.
The housing market is still buoyant and the question of supply and demand is also no doubt feeding the concern over prices. According to reports, house building is becoming slightly more prevalent. This would lead to less pressure on a smaller number of properties for sale, which in turn can drive prices up in a more competitive market.
No doubt all eyes will be on the state of housing prices in the months to come. The removal of the Funding for Lending scheme means things could change in the near future, with the potential to ward off the housing bubble some are speaking about even now. If this has the desired effect it could make buying property more difficult – but it could also see off any potential disaster on the home buying front. No one wants a repeat of the housing bubble and the associated fallout that occurred a few years ago.