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Property price update – February 2018

Monitoring the housing market is very important for many, particularly those doctors and dentists who are looking to purchase their first home or who are investing in buy-to-let properties. With 2018 in full swing, we look at what is happening in the UK property market. Our monthly Property Price Update gives you a summary of what the experts are saying.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

What is happening with the UK property market?

The latest data released by Nationwide shows that the annual house price growth has increased by 3.2% during January, a steady 0.6% increase from December.

The average house price for January was £211,756, slightly up compared to December’s average house price of £211,156.

The annual growth demand remains in the 2-4% range, consistent with Nationwide’s prediction early last year.

Regional differences

Growth in some areas of the country is faring better than others. In fact, London’s growth has turned to a negative, with a 0.5% average drop in prices. However, house prices still remain roughly 55% above their levels from 10 years ago. The West Midlands outperformed all other regions with an annual rise of 5.2%, followed closely by the South West’s 4.8%.

First time home buyers face a tough market

While home ownership rates in 2017 remained level from 2016 (62.6% versus 62.9%), the dwindling number of 25-34 year olds, traditionally the age range most likely to be first time buyers, plummeted to 37%.

This has led to many speculating that young adults are not only putting off buying a home now, but they’re actually not buying at all.

Additionally, Rightmove‘s data suggests the Stamp Duty (SDLT) exemption scheme has created a further demand for entry level properties, thus resulting in those properties prices increasing – a consequence many predicted after the announcement last November.

Consequently, the rental market has reached a record high – 4.7 million homes are privately rented – an astounding 75% rise over the last decade.

Surprises and challenges

The growth in housing prices is slightly surprising, with mortgage approvals and buyer enquiries remaining low but the lack of available existing and new build properties on the market seems to be a major factor in keeping prices at bay.

Growth is expected to be modest in keeping with the continual slow economic growth and strain on household incomes with the historically low unemployment and mortgage interest rates mitigating the effect.

However, the challenges facing buyers in 2018, such as a higher deposit requirement than 10 years ago, remain the same as last year and external factors such as the impending Brexit loom over potential home buyers’ heads.

To learn more about the ever-changing property market, keep an eye on our monthly property price update, or contact an advisor for guidance.

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