At the risk of sounding like a stuck record house prices have risen again. Reports from the end of October show the UK’s buoyant house market continues its national upward trend with prices rising 3.9 per cent in the year to October, up from 3.8 per cent last year. Investors can continue to sleep easy – it’s the same news we’ve heard for months – while house price growth is still strong. Figures from the Land Registry showed average prices in the capital hit the £500,000 milestone in September, up 9.6 per cent from the same month last year.
Landlords also received the reassuring news that the cost of renting a home is rising at the fastest rate for more than two years as Britain’s chronic housebuilding shortage pushes rental prices up further. Private rents rose 2.5 per cent in the year to June, figures from the Office for National Statistics show — with rents in London up 3.8 per cent year on year. Rents have been on an upward trajectory for more than four years. Since January 2011 — the start of the ONS’s data series — rents across Britain have increased 10.2 per cent, the figures show.
Steve Bolton, founder of property investment adviser Platinum Property Partners, said that rents were being pushed up by “a shortage of suitable properties coupled with strong consumer demand”.
The Express newspaper reported at the end of October that the average UK property price will rocket by 25 per cent over the next five years to more than £320,000, forecasts show.
The upbeat outlook represents a £60,000 boost to the value of a typical home. It is the second time this year that the prediction has been revised upwards by the Centre for Economics and Business Research, one of the country’s most respected forecasters. The increase is explained by the effect on the market of fewer homes being put up for sale. Economist Nina Skero, author of the report, said: “A reduction in the number of properties being put on the market has placed further upward pressure on house prices in some parts of the UK. This is a result of low levels of housebuilding but also other factors such as an ageing population and the rising cost of moving up the property ladder.”
Stephen Noakes, of Lloyds Banking Group, said: “House price growth remains robust. Continuing economic recovery, earnings growth in excess of consumer price inflation and very low mortgage rates all underpin housing demand.” Supply is highly restricted with the stock of homes available for sale falling further to new record lows He added: “Supply is highly restricted with the stock of homes available for sale falling further to new record lows.
Demand is predicted to soon outstrip supply and there simply is not the time to build enough new homes – even if that was the only reason behind the drought.
Housing minister Brandon Lewis has said he wants a million homes built by 2020 to address the current large shortfall in an attempt to redeem the issue.