House Prices Up 6.2% in a Year as Demand Strengthens

This article by Michelle McGagh of citywire money on October 3rd, 2013 reveals the continued and steady rise upwards of house prices according to the figures from Halifax.

More sellers might be putting their houses on the market but the continued disparity between supply and demand means that house prices have increased another 2% in the past three months.

Halifax's house price index shows a 6.2% increase in UK property prices in the past year, pushing the average price of a home to £170,733.

Prices in September were up 0.3% on the previous month, the eight successive monthly price rise, although prices are still 14% off their 2007 peak.

The demand for property has been fuelled by the government’s Funding for Lending scheme and the successful implementation of the first part of the Help to Buy scheme.

Supply has lagged behind, meaning prices have ticked upwards, but it now looks like more homes are coming on to the market. According to the Royal Institution of Chartered Surveyors the number of people putting their property up for sale increased successively in the seven months to August.

The number of new homes being built has also increased and in the first six months of 2013 new building starts were 22% higher than the same period last year.

Martin Ellis, Halifax housing economist, said: ‘House demand has risen more quickly than supply in recent months, putting upward pressure on prices. Demand has increased against a background of low interest rates and higher consumer confidence underpinned by signs that the economy has begun a sustainable recovery.’

He added that ‘supply is beginning to respond to the pick up in demand’ which should help to ‘constrain prices’.

‘The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home, enabling more to put their property on the market for sale.’

The figures come days after the prime minister announced the government was fast-tracking the second part of its Help to Buy scheme. The first part sees the government offer a five-year interest–free loan up to 20% of a new build property’s price if a buyer has a 5% deposit.

In the second part the government will guarantee 15% of the mortgage taken out on any property up to a total property price of £600,000. Again the buyer must have a 5% deposit.

The second part was not supposed to come into force until January but will now be up and running next week. Critics, including business secretary Vince Cable, have said the mortgage guarantees are not needed and will further fuel house price rises.

Article Source: http://www.citywire.co.uk/money/house-prices-up-6-2-in-a-year-as-demand-strengthens/a707015?ref=citywire-money-latest-news-list