The welcome news of the latest hike in house prices is great for anyone selling property, but not so good for anyone looking to buy, particularly in certain areas of the country. The current housing price rises do seem to be very much a regional phenomenon, as in many other place across the UK, prices are either static or have minimal change.
However, in the London market and across the South East, prices are rising rapidly. Nationwide Building Society released figures at the beginning of the year showing increases in prices in London and the South East of anywhere between 7.6% and 14.9%, but what impact does this have on the rest of the economy?
The Bank of England has reported this week that they will be conducting a risk assessment on the banks in the UK to see what effect another property crash and an interest rates rise would mean for the economy, following comments made by the head of the Office for Budget Responsibility, Robert Chote. He warned that the current heat in the market, where the average price of a house has risen £17,000 in just 12 months but the average wage rise was only £417, was not sustainable.
However, the news earlier this week that inflation has fallen to 1.7%, its lowest level in four years, may just mean that interest rates won’t be raised any time soon and therefore it seems unlikely that the Bank of England will be stepping in with an interest rates rise to try to stall the property market.
It does seem to be a difficult call to make though, with all of the signs in London of a market that is overheating, with the return of gazumping, buyers queuing to view property and offers being made at 10% over the asking price, who knows what will happen in the next 12 months.
If you have any property questions, please call Ingrid Hindle or Jo Ayrton in our Warminster office on 01985 214444, or Sandra Smith or Sarah Gratton in Westbury on 01373 865577, or email ihindle@mulaw.co.uk or ssmith@mulaw.co.uk and we will be delighted to help.
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