UK house prices supported by record-low borrowing and chronic shortage of homes
UK house prices slowed to a four-year low in March however recent indicators have suggested that prices will continue to rise due to record low mortgage rates and a lack of housing supply.
According to the latest house price index published by Halifax, property inflation in March was 3.8% year on year, down 5.1% on the previous month and significantly lower than the 10% increase recorded in March 2015.
The report claims that average house price in the first quarter of 2017 stood at £219,755 just 0.1% higher than the previous quarter.
Mark Harris, chief executive of mortgage broker SPF Private Clients, believes that record-low mortgage rates and a “chronic shortage of homes will support property prices moving forward”.
Harris said: “Even though swap rates have risen on the back of higher inflation, lenders seem willing to absorb some of the higher costs of funding, at least for now, in order to compete for business.
“This is good news for borrowers and those re-mortgaging as we head into what is usually the busiest time of the year for the housing market.”
House prices have continued to rise faster than incomes despite the fall in house price growth, partly due to the shortage of supply, with the number of properties being listed in February falling for the twelfth month in a row.
Halifax housing economist Martin Ellis commented: “A lengthy period of rapid house price growth has made it increasingly difficult for many to purchase a home as income growth has failed to keep up, which appears to have curbed housing demand.
“Nonetheless, the supply of both new homes and existing properties available for sale remains low. This, together with historically very low mortgage rates, is likely to support house price levels over the coming months.”
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