House prices see 7.5% increase

File photo dated 02/10/2012 of a general view of an estate agent's 'Sold' sign outside a property. House prices surged by 7.5% annually in December but fell back month-on-month for the first time in almost a year, Halifax has reported.  PRESS ASSOCIATION Photo. Issue date: Wednesday January 8, 2014. The year-on-year increase was close to a 7.7% rise recorded in November, which was the highest annual lift seen in six years.  See PA story ECONOMY House. Photo credit should read: Chris Ison/PA Wire

%VIRTUAL-SkimlinksPromo%House prices surged by 7.5% annually in December but fell back month-on-month for the first time in almost a year, Halifax has reported.

The year-on-year increase was close to a 7.7% rise recorded in November, which was the highest annual lift seen in six years.On a monthly basis, prices edged downwards by 0.6% in December, marking the first fall in 11 months and taking the average house price to £173,467.

But Halifax said that monthly price movements can be "volatile" and on a quarterly basis, which is generally a more reliable indication of the underlying trend, prices lifted by 1.9%.

Halifax has predicted that house prices are set to rise this year at a similar pace to 2013, with an increase of between 4-8% across the UK over 2014.

It undertook recent research which found that more than half (51%) of people think 2014 will be a good time to sell a property, compared with 39% who believe it will be a bad time.

This is the first time since the regular survey began in spring 2011 that the proportion of people thinking it would be a good time to sell outweighed those who say it would be a bad time.

A lack of homes on the market is one of the main factors which housing market experts say has been pushing up house prices as demand from would-be buyers has been increasing in recent months amid Government schemes such as Help to Buy to give people a helping hand on or up the property ladder.

Martin Ellis, Halifax housing economist, said: "The recent strengthening in house prices is increasing the amount of equity that many home owners have in their home.

"This will potentially encourage and enable more owners to put their property on the market for sale over the coming year, therefore boosting supply.

"Indeed, our consumer confidence research shows that there has been a significant improvement in sentiment towards selling in recent months. These factors should help to curb the upward pressure on prices."

Halifax's study comes after building society Nationwide recently reported that house prices surged by 8.4% over 2013 across the UK as the market revival became increasingly broad-based across the country.

Howard Archer, chief UK and European economist for IHS Global Insight, said: "Latest surveys and data on the housing market are largely robust and there is a very real risk that a new housing bubble could really develop in 2014 - especially as the strength in house prices is becoming widespread."

Mark Harris, chief executive of mortgage broker SPF Private Clients, highlighted toughened mortgage lending rules which are set to come into force in April.

The Mortgage Market Review rules are being put in place to make sure there is no return to irresponsible lending and that borrowers can only take out deals that they can afford to pay back.

Mr Harris said: "Lenders are keen to have a strong first quarter and continue to offer some extremely attractive mortgage rates.

"With the Mortgage Market Review set to be introduced at the end of April, this will likely lead to a
slowdown in lending as lenders get to grip with the changes they need to introduce."

Make sure your home's insured – get a quote now

The people who affect house prices
See Gallery
House prices see 7.5% increase

They have the power to push a price higher, depending on how many other people are in the running for a home and how liberal they want to be with the truth to the buyers. In some cases, they can also do more harm than good by initially overvaluing a property. The worst case scenario is the home eventually sells for less than it would have done had it been priced realistically in the first place.

Sometimes a quick-moving solicitor can be the difference between getting the home at the price you want and getting into a bidding war or missing out entirely. If the buyer needs a quick sale, they're more likely to do a deal with someone who has a flexible solicitor who can push through the sale so it suits them.

Research by Halifax concluded that anti-social neighbours could take £31,000 off the price of an average home. If you’re selling, you should declare any problems you’ve had on a Seller’s Property Information Form, otherwise you could face a claim later on.

While an increase in Council Tax might not be too much of a deterrent to a potential buyer, plans to grant permission for new homes, a mobile phone mast or wind turbines could knock an asking price down. If you're a buyer, the local council should have details of any future planning applications and you can search them for a small fee.

A lot of traffic in an area obviously has an effect on air quality. Since 1997 each local authority in the UK has carried out studies of the air quality in its area. If an area falls below a national benchmark for air quality, it has to be declared an Air Quality Management Area (AQMA). Some residents of the Llandaff area of Cardiff expressed concern that it had become an AQMA due to an increase in traffic in the area. Whether this becomes a widespread issue remains to be seen.

Mortgage availability is a key driver of property prices. If no-one can take out a mortgage, then prices will stall and eventually fall. We've seen this happen in parts of the UK in recent years, as lenders tightened up their criteria following the credit crunch. Conversely, good mortgage availability will mean more people are competing for properties - to a seller's advantage if their home is desirable.

An outstanding local school can add around 8% to the value of a home, according to the Royal Institution of Chartered Surveyors. On the flipside, a not so good Ofsted report can take off a similar amount. If you’re concerned about a school’s performance, one way to get involved is to become a governor.

Initiatives such as the Help To Buy scheme have been credited with pushing house prices up. A buoyant economy with strong employment gives people the confidence to buy and leads to an upward shift in house prices, while rises in unemployment have the reverse effect. Planning restrictions, at both a national and local government level, affect the number of homes in a particular area.


Read Full Story