UK Property Market Update – Winter 2013

The UK property bubble is building

  • The average family home is up £5,583 and London properties have increased by more than £7,000.UK property prices went up by £7,430 in October
  • Average sale price in London is now £404,199
  • Help to Buy scheme is inflating prices
  • Rents increase 11% to £785pm, 41% of the average UK wage.

UK rents

UK property Sale prices

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average UK Property Prices In London, where the average sale price is higher than ever, 14 people compete for every property.

Mortgage applications rose by 6% in October, and almost double 2012 numbers. It comes as the Council of Mortgage Lenders said last week the number of homes sold this year will be more than one million for the first time since the financial crisis began in 2007.

The government Help to Buy scheme is pushing prices up.

Out of the 5,375 sold so far, the highest number of Help to Buy sales have been in Leeds, Wiltshire, Milton Keynes and Reading.

The average price of a UK property bought under the Help to Buy scheme was £194,167, with an average equity loan of £38,703.

UK property transactions

Critics warned the UK-wide second phase of the scheme, which began last month and is not restricted to new-builds, would cause a housing bubble.

It guarantees 15 % of the value of the home loan.

After almost coming off the market, Buy to Let mortgages are also being approved strongly. Landlords and investors are buying up and completing deals to keep up with the increasing rent demand and to cash in on the rental increases. This is a very encouraging sign for property investment.

However as the final graphic shows there is still not enough supply in the market, especially in London where there are almost 3 offers for every sale.

PropVestment’s thoughts

Offers and Sales

Yes the UK property market is picking up and in fact picking up a little too fast. But this is mainly due to the Help to Buy scheme which is resulting in unrealistic implications on price and the market. The only ones to benefit are the banks and house builders. First time buyers, buying under the scheme face higher interest rates compared to traditional mortgage products.   
The market right now is too competitive and sellers can take advantage. We do however have concerns that many first time buyers under Help to Buy will suffer from negative equity in years to come once the Government pulls the plug on the scheme and prices fall back to their realistic, natural and sustainable level.

Buy to Let mortgages

Source: Daily Mail
Nirav

About PropVestment UK

Nirav Shah, LSE Graduate turned Property professional
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