As the UK’s current largest mortgage lender, when the Halifax publishes its monthly figures, the banking and finance world sit up and listen. However, a rise in house prices isn’t necessarily good news
In the June property market, the Halifax has reported an average increase in the price of a home which is in excess of £1,500. While this news may seem positive from the outset, the bank is warning that sales will still remain slow and that values were very unlikely to see another substantial increase for the next twelve months, at least.
In general, the average property price rose by 1% in June and while this has taken many by surprise, it is a trend which is not set to continue. As Halifax’s chief economist, Martin Ellis has observed the fact that continual and low level mortgage payments relative to income and the slight increase in employment may have fuelled and supported the steady growth of house prices since the beginning of the year. Going on to say that the expectations of the property market are set to be understandably stagnant over the next year, Martin Ellis remains optimistic when comparing current figures to those of last year.
It was only in the May of 2011 that the UK experienced a significant dip in house prices with an annual decrease rate of 4.2%. In comparison, it seems that we are currently experiencing more stability within the housing market at the moment, with the annual rate standing at between 0% and -0.5% in each of the last three months.
While the economic advantages of falling inflation and unemployment are clear, home owners are still being warned that the market is still not set to improve dramatically. The current market is strongly in favour of the buyer and with this knowledge, potential property investors are likely to offer low and view more properties to ensure they are selecting the right house for them, in the right area and with all the amenities they desire.
With home buyers having the upper hand, the property market is likely to stagnate with sales remaining slow as the amount of homes available to buy surpasses the number of people who are ready, willing, and able to buy in such economically uncertain times.
Simply put, if anyone is looking to sell their property over the next twelve months or so, the vendor needs to put their property on the market at the right price or face a very long wait to find a buyer.
Collective data from a broader range of lenders also suggests that the North South divide is as prevalent as ever; with property prices experiencing a slump in some regions, London and the surrounding commuter belts have seen the biggest property price rises over the last quarter.
As always, when it comes to selling a property location is key and many home owners who are in some of the less popular parts of the UK will undoubtedly have a need to reduce their property prices in an effort to force a quicker sale.
Another factor that is more than likely to effect the growth of property prices and sales is the news that the Bank of England is set to print another £50bn to help bring the UK out of recession and kick start the economy as part of its on-going quantitative easing plan. While this may give lenders more flexibility in the mortgage market, the quantitative easing measures already in place have done nothing to help savers, and as lenders are currently demanding large deposits in order to secure a loan against a new property, those who are looking to step onto the property ladder are not going to find the journey any easier.