UK house prices bounced back in March, rising by 1.1%, after having fallen in February, according to the Halifax – one of Britain’s largest mortgage lenders. The latest increase is the eight rise in the past nine months and pushed the annual rate of house price inflation up to 5.2% from 4.5% in February.
By the Halifax measure, prices stand 9.1 per cent above their trough reached in April 2009 and 5.2 per cent higher than they were at this time last year. The rise means that the average home in the UK now costs £168,521, nearly £11,000 higher than a year ago. The annual rate of price inflation is now at its highest since December 2007, the Halifax said.
The UK’s other major mortgage lender – the Nationwide Building society – published its own set of figures showing UK house prices rose by 0.7% in March, and in fact 9% higher than a year ago.
Potential first time buyers will take little joy out of the news that the annual rate of house price increase currently stand at 5.3% with the majority of property price indices pointing towards further rises this spring. This along with the fact that banks are cherry-picking only those with the very best credit score will keep most in rented accommodation for many years to come.
This has led to new calls from numerous UK housing associations for the Government to do more to address the growing housing shortage. The National Housing Federation stated after a recent poll among first time buyers that most young people and especially Londoners are giving up hope of ever being able to afford their own home before middle age.
More than half of Londoners aged 18 to 30 expect to wait at least 10 years before being able to buy and a further six per cent — one in 12 — say they will not be able to afford to buy before 2030.
PricedOut.org.uk, an independent group that campaigns on behalf of 1.2 million first time buyers, recently noted that the average house price in London is £333,394, making it difficult for even high earners and couples to get on the housing ladder. The organisation said the problem is being exacerbated by the fact that many young people who are living and working in the city are saddled with significant student debt and blamed buy-to-let investors for snapping up new-builds. They noted that such individuals and companies enjoy tax breaks that make it harder for first-time buyers to compete with them.
This may be true, but what these charities need to realise is that owning your own home is a privilege – not a right. Furthermore, if it wasn’t for buy to let investors buying property and providing accommodation for people there would be even more of a strain on the housing charities and the government.
The UK has an unmatched obsession when it comes to owning property – something that has led to prices doubling on average every 7 – 10 years since records began. In the rest of Europe it is actually more common to rent than own and most people never own their own home. The long and short of it is that those living and working in London will have to come to terms with the fact that they will have to save for many years in order to buy their own home and accept the fact that they will be tenants until such time.
As a London property investor I can therefore rest assured of an ever growing pool of willing tenants in the short term while knowing that the Brits obsessive desire to own bricks and mortar will look after capital growth in the long term.