Prices are going up but so is inflation
House prices are still rising but inflation is muddying the waters when it comes to meaningful gains. Sharon Dale reports.
The latest figures from the Home. co.uk Asking Price Index shows that the UK property market is still buoyant despite rising interest rates and the cost of living crisis.
Demand is high and is markedly increasing in London and the North-East, while stock levels remain low by historic standards.
Asking prices rose in every English region, Wales and
Scotland during the last month.
The West Midlands saw the greatest monthly gain with 1.4 per cent and the South-West recorded the highest year-on-year rise of 10 per cent.
In Yorkshire, prices rose by
1.3 per cent over the past month and by six per cent year-on-year bringing the average house price in the region to £242,151.
The neighbouring North-West recorded a 1.1 per cent monthly increase and an annual rise of
8.7 per cent, taking the average house price to £254,902, while the North-East recorded a 0.9 per cent monthly rise and 4.8 per cent year-on-year growth bringing the average price to £185,784.
Supply of homes for sale in Yorkshire has risen by seven per cent over the past year and the average time on the market is 115 days.
Home.co.uk say that higher prices appear to pose no significant obstacle to buyers and adds that such is the vim and vigour of the market that the North-East, which was previously stock rich with stagnating prices, has now entered a boom phase.
However, the number crunchers at Home.co.uk point out that house price growth looks less attractive to those who own their property outright when inflation is taken into account.
They say: “Using the latest Retail Price Index as a measure, inflation hit 13 per cent in April, excluding housing, which is double the asking price growth for England and Wales.
“A pound invested in property in April 2021 now has the purchasing power of 93.4 pence, despite nominal home prices rising over the same period.”
Those with a mortgage fare better, they say: “Those servicing a mortgage at three per cent interest will only have to pay back 90 pence for each pound outstanding.
Ten per cent of the debt has disappeared in real terms and this percentage will only increase as inflation climbs further.”
The analysts have bad news for tenants as figures show that rents are up across all regions.
The mix-adjusted annual average rise for the UK is 18.8 per cent with supply worsening and newly available rental properties down by 24 per cent year-on-year.
In 2000, there were two million households in private rented accommodation in England and last year this figure had reached 4.43m.
Marriage and relationship breakdown, the appeal of maintenance-free rental contracts and the need for flexible accommodation continue to fuel the demand, alongside an increasing population.
Pity those who need to rent in London where rents continue to set new records.
Those in the City have risen by 51
per cent over the last year and by 44 per cent in Lambeth and 43 per cent in Hackney.
Meanwhile, as a result of rising house prices, four million households have been pushed into a higher stamp duty bracket.
Of those, 28 per cent have moved above the £125,000 stamp duty threshold, which is not good news for first-time buyers, though it doesn’t appear to have dented their ambition to have a home of their own.
Research by Stipendium shows that despite house prices climbing to record highs, first-time buyers in Yorkshire account for 9.3 per cent of all property transactions.
Those first-timers looking to buy a new-build home can still take advantage of the government’s Help to Buy Equity Loan scheme, which ends in March next year, 2023.
The property must be a newbuild sold by a Help to Buy registered developer and it must be the only home you own and live in, plus it must not have been lived in by anyone before you buy it.
There is also a maximum property purchase limit, which differs depending on which region you live in. In Yorkshire this is £228,100.
You will need a minimum deposit of five per cent of the purchase price and arrange a repayment mortgage of at least 25 per cent of the price.
You can then borrow an equity loan to cover from five to 20 per cent of the purchase price or up to 40 per cent if you buy in London.
You do not have to pay interest on the equity loan for the first five years.
For more details visit www.gov. uk/help-to-buy-equity-loan
For first-time buyers still saving fo ment’s incredibly generous Lifetime ISA.
It allows those under 40 to put in up to £4,000 each tax year. Any money saved gets a 25 per cent government bonus of up to £1,000 per year.
You can use it for a deposit on a first home costing £450,000 or less and if you buy with another first time buyer, you can both use your Lifetime ISA savings and the bonus.
A pound invested in property in April 2021 now has the purchasing power of 93.4 pence