Several reports in September fueled rumours that a future UK interest rate increase added to rising costs will not slow down the increase in UK house prices.
A report by BNP Paribas Real Estate predicts that over the next four years UK house prices across Britain on average will rise by 30.4%. The Times responded to this report by suggesting that the housing is being “buoyed by robust economic growth and the chronic undersupply of new homes”.
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Latest figures from Hometrack, who track UK’s house prices, found that the average price in the UK grew 4.3% in the three months preceding July which represents the highest quarterly growth since 2004. According to the Daily telegraph the index predicts a 10% growth for 2015 as a whole across the UK.
The housing shortage in the UK is continuing to be a political and economic issue with house price rises being fueled by not only the lack of new homes being brought to market but existing flats and houses not being put up for sale in the numbers required. This immediately affects those that rent property in the UK as well.
The Guardian newspaper reports that estate agents Countrywide stated that UK rental prices increased in July to an average of £937. London had the fastest rise in rental prices going up by 6.8% making the average rent in the centre of the city to £2,583 per month. Adding to London’s cost index was the claim that a one bedroom apartment across 18 London boroughs now rents for more than £1,000 per month confirming London as one of the world’s most expensive cities to live.
On 10th September figures from Halifax confirmed that UK house prices are soaring with average house prices in UK 2.7% higher than the previous month. According to The Halifax (the largest provider of residential mortgages) the reasons for the continued increase was due to several factors. UK wage increases as well as exceptionally low mortgage rates coupled with a weak supply and significant shortage of houses coming on to the market.
“House price inflation has now quickened in each of the last seven months following a sustained period of easing towards the latter half of 2014,” Simon Rubinsohn, Rics’s chief economist, told The Guardian. “And there is good reason for this trend to be sustained into 2016.”