The UK housing market is continuing its run of modest improvement - a sign that those considering property investment need to act fast to maximise potential yields. In June house prices increased by 0.3 per cent and were 1.9 per cent higher than the same time the year previously. The typical UK home is now worth GBP 169,941 on average. However, unexpectedly, southern regions of England continue to record stronger rates of price growth, particularly London.
In the south of England house prices increased three per cent year-on-year in Q2, which is more than twice the 1.4 per cent pace recorded across the UK as a whole in the three months to June. Year-on-year London house prices were up by 5.2 per cent, taking the price of a typical home to GBP 318,214. The gap between house prices in London and the rest of the UK is now greater than it has ever been and there are fears a bubble could be on the horizon.
Nevertheless, nationwide prices have yet to recover to pre-recession levels and it is believed potential buyers' struggle to get on the property ladder is keeping a relative cap on values. However, recent government schemes are starting to change the playing field.
Speaking about June's figures, Robert Gardner, Nationwide's chief economist, explained: "Demand for homes has been supported by further modest gains in employment, as well as an improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures, such as the Funding for Lending Scheme. Signs of a modest improvement in wider economic conditions may also be playing a role in boosting buyer sentiment."
A lack of housing supply is also driving up prices and Mr Gardner isn't convinced things will be changing anytime soon. Construction data has pointed to further declines and in Q1 2013 housing completions in England were down eight per cent over the year and 40 per cent from the 2007 average.
- Wednesday 03 July 2013