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Property Price Update – May 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 with 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.

News from the UK Property Market

The latest statistics released by Nationwide indicate that annual house price growth has increased slightly during the month of April, rising to 2.6%, up a marginal 0.2% from March’s growth rate of 2.1%.

April’s average house price came in at approximately £213,000. This is a modest improvement on March, where the average property price came to £211,625.

Consistent with Nationwide’s prediction last year, 2018’s annual growth demand remains in the 2-4% range. Future developments, as always, are dependent on the wider economy, which continues to be subdued. Nevertheless, experts still anticipate house prices to grow 1% in the remaining months of the year.

Decline of cash purchases

As a result of the additional stamp duty required for purchasing rental properties and second homes, the number of properties being acquired with all cash offers has decreased slightly over the last year and a half. However, cash buyers remain integral to the housing market, making up about a third of real estate transactions.

This decline is a stark contrast to 10 years ago when there was a major increase in the number of cash purchases due to the reduction of mortgage transactions during the recession. Cash buyers didn’t need to be concerned about the the additional scrutiny surrounding mortgage applications and credit checks.

Another reason for the increase is the large number of buyers that are selling a home they own outright. As of 2014, the percentage of individuals in England who owned their own home was actually more than those who still paid into a mortgage.

Whether they are simply moving or downsizing, they are purchasing their new home with the cash profit they earned from the sale of their house.

As usual, London is the exception to the rule, most likely because of the price of London property.

Other buying trends

Besides the decline and rise of cash purchases, there are other notable trends in the housing market.

For instance, the number of first time buyers has been rising steadily over the last 10 years, due in large part to government schemes like Help to Buy, aimed at helping buyers get on the property ladder.

Unfortunately, the number of people moving homes has remained stagnant which is unsurprising with the lack of available properties on the market.

Over the last few years, the number of buy to let purchases has declined sharply – this can be attributed to differences in underwriting standards, but most importantly, to changes in tax law – no longer allowing landlords to offset their mortgage interest against profits in an effort to reduce their tax bill.

If you’re planning to buy or sell property this year, make sure you check our monthly property price update, or contact an advisor for personalised advice.

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