27th November 2015
The latest data from the Land Registry shows house prices increased 5.6% in the year to October and the Autumn Statement could inflate them further.
Monthly house prices rose 0.4% taking the average house price in England and Wales to £186,350.
The greatest rises in property value were experienced in London, increasing 10.6% annually, whereas Yorkshire and The Humber saw the lowest annual price growth with an increase of 1.4% – the area also saw the largest monthly price fall with a decrease of 1.8%.
Brian Murphy, head of lending at Mortgage Advice Bureau, said affordability would become more of an issue as rates of growth are not slowing.
‘Affordability remains a concern for many first-time buyers, and the rate of price growth isn’t likely to slow unless housing supply is increased,’ he said.
Murphy added that the changes in housing policy made in the Autumn Statement, including 400,000 new homes, London Help to Buy and a 3% hike in stamp duty for landlords, would have little effect if there was no immediate increase in supply.
‘Although the changes announced in the recent Autumn Statement will increase the number of new homes in the long-term, landlords and second-homeowners will be rushing to purchase before stamp duty changes come into effect. This could temporarily inflate prices in some parts of the market,’ he said.
He added that the surcharge on stamp duty meant that landlords are likely to look for lower priced properties.
However, there is no chance of those hoping to buy in the capital snapping up a cheap property.
‘First-time buyers in the capital currently face average prices of over half a million pounds, according to October’s figures,’ said Murphy.
‘The London Help To Buy initiative will therefore certainly come as welcome news to all those struggling in this highly competitive market. Given that average house prices in London shot up by 10.6% in 12 months, the higher 40% equity loan is clearly needed. It’s encouraging to see the Government recognise the affordability challenges in this unique market and act on it.’