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. We’re taking a look at what is happening with the UK property markets during the summer months of 2018. 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
Luckily, annual house price growth in July 2018 rebounded after June’s all-time low. The latest figures released by Nationwide state that annual house price growth has crept back up to 2.5% during the month of July, shooting up 0.5% from June’s woeful growth rate of a mere 2%.
Average house prices in July were up compared to the previous month. Last month prices came in at approximately £217,000. It’s a decent increase from June, where the average property price was £215,444.
The return to mid-two percent growth rate is welcome. Despite still being at the lower end, this month’s prices still stack up against Nationwide’s housing price prediction for 2018 (of between 2% and 4%). It’s a positive trend that July’s numbers provide more of a cushion than June’s. It also continues the 12 month trend of staying within the 2-3% range, indicating an equilibrium between supply and demand available.
House pricing experts are still forecasting 1% growth for the rest of the year. But of course the wider economy will play a role in the performance of the market.
Rate increase effects on households
We have now had news of another rate increase by the Bank of England’s Monetary Policy Committee (MPC). But will a 0.25% increase really have a major negative effect on the housing market?
It’s not likely, according to experts, as long as the economy remains stable, because the majority of borrowers have taken out fixed rate loans, which aren’t susceptible to rate hike changes. Even those that do still have a variable interest rate mortgage (just 35% of all open mortgages) won’t be impacted strongly – the increase amounting to as little as £16 per month on an average mortgage.
Fortunately, a gradual rate change appears to be the plan for the MPC because over the next five years, the rate is only expected to rise about 1.25% during that time.
There are other factors affecting UK households; a slow rise in wages and an increase in the cost of living have been putting a strain on them for some time now.
And those households with a high debt service burden, like a mortgage that costs 30% of their income, may be more sensitive to bank rate changes. If an individual is unlucky enough to also have a variable rate mortgage, even a small rate bump will present a challenge.
Always remember to visit our site monthly for your regular update on the nation’s property prices.
If you’re planning to buy or sell property this year contact an advisor for personalised advice.