HOUSE PRICES IN UK CONTINUE TO RISE



Rising house prices in the UK now stand at 7.6 times the average annual salary, more than double the figure for 20 years ago, according to official figures.

 

The Office for National Statistics (ONS) in a recent report claimed that between 1997 and 2016, the average price paid for a home shot up by 259% while average earnings only rose by 68%.

 

The ONS said that housing affordability has worsened in all local authority districts. In 1997, house prices were about 3.6 times workers’ annual gross full-time earnings.

 

Halifax said that property prices rose by 5.7% in the year to the end of January.This was less than the 6.5% annual growth seen in December, leaving the typical home valued at £220,260.

 

Nationwide Building Society said that “the general outlook for the UK housing market remained uncertain”.

 

The lender is the largest in the UK mortgage market and says that house prices in the three months to the end of January were 2.4% higher than the previous quarter.

 

However, according to the lender, price growth has started to slow and is well below its peak of 10% seen last March.

 

Property values had actually fallen by 0.9% in January compared with December, prompting a mixed view of the outlook in the industry.

 

“The lack of properties on the market and low-interest rates are keeping prices up,” Halifax said, but several other factors would slow house price growth in 2017.

 

“Weaker economic growth and increasing pressure on spending power, along with affordability constraints, are expected to dampen housing demand, resulting in some downward pressure on annual house price growth during the year,” said Martin Ellis, Halifax housing economist.

 

The London Property Market

 

For the past 30 years or so, whatever happens in London’s housing market has had a knock-on effect on the rest of the UK’s property prices. It could best be called the ‘ripple effect’, i.e. what happens in London will gradually spread out across the country.

 

When house prices in London go up, those increases are followed elsewhere, starting in the south-east of England and then spreading out.

 

Similarly, when the London house prices have crashed, the rest of the country has followed suit.

 

London’s property market has been scandalised in recent years by foreign investors buying up huge swathes of housing stock purely for investment. Many of these properties remain untouched and unloved, merely waiting for their value to go up and then possibly sold on to yet another foreign investor.

 

In 2016, Kensington and Chelsea were the most expensive areas to buy property in England and Wales. The cost of buying a house was 38.5 times the average annual income, which is more than three times as much as in 1997 when it was 11.8 times average earnings. But, in the north west of England, prices in Copeland and Cumbria (which includes the port of Whitehaven), are typically only 2.8 times the average salary.

 

In January of this year, a detached house in the boroughs of Kensington and Chelsea sold for £24.2m.

 

Major house builders, the Berkeley Group, is the fourth largest UK house builder, behind Persimmon, Taylor Wimpey and Barratt’s. In their opinion, the say that “The housing market in London and the South East has now stabilised”.


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