In the last three months of 2013 up to January 2014, house prices in the UK were 1.9% higher than in the previous three months – according to figures recently released by Halifax. Experts believe that this increase in house prices is because of the lack of supply currently coming onto the market. It is thought that having fewer homes on the market will add upward pressures on the prices.
The house prices increased by a total of 1.1% in January, while prices over the three months to January measured 7.3% higher than they were the year before.
Since the supply of properties in the UK has been slow to respond to the upward market conditions, there is a stronger demand for homes. This has resulted in house prices continuing to slowly rise.
As well as the increase in demand, there has also been low interest rates and much higher consumer confidence, which is a sign that the economy is recovering and unemployment is going down. Also, schemes such as Help to Buy have boosted the demand for housing in the UK by making it possible for more home buyers to afford their first property.
George Osbourne Predicts Rising Prices
According to Chancellor George Osbourne, the demand for homes in the UK will push house prices higher over the next decade. Also, he has stated that it will be years before there are enough houses built in the UK to satisfy the demand. This is despite the reforms that have been made to the planning system. Osbourne predicts that it will be 2020 before the house prices return to their pre-recession peak.
Over the next several years, the government will be scrambling to build more homes in order to cover the demand. According to Business Secretary Vince Cable, the government’s mortgage scheme should be curbed. He says that there is a housing boom that could get out of control in London and the South East, unless there were to be a rise in interest rates.
Will house prices continue to rise? It’s hard to predict the future when it comes to the way that house prices in the UK will behave. However, the way that earnings are currently failing to keep pace with consumer price inflation is predicted to be a major factor that constrains the growth of house prices.