Homeownership property price growth confidence remains high in UK

There is a continued confidence in the UK’s property market, despite questions regarding the continued rise of house prices, particularly in the London area. A report by Clydesdale and Yorkshire Banks suggests that a majority of homeowners still anticipate that their property will rise in value during the coming year.

Only a small 2% consider that we have now reached a pinnacle as far as the ability for people to cope with high mortgages is concerned. The statistics suggest that confidence in the market is only slightly down on last year’s figures, which indicates a levelling out and slight slowdown in the rates of increase.

London remains a property hotspot

London definitely remains the property hot spot with 73% confident that prices will continue upwards and few predicting a downturn. First-time buyers and young couples who are both working and need to live in or near the city are still keen to purchase. This alongside the continued interest from speculators who want to purchase buy-to let properties, plus the shortage of available housing, makes it likely that prices will continue to rise, even if it is at a slower rate.

The green belt around London acts as a tight band limiting new building. Within its circle, available building land is very scarce, thus keeping potential properties from being built, to provide for the continued interest from buyers.

6% house price rise estimate

The Royal Institute of Chartered Surveyors (RICS) estimates that house prices will rise by 6% on average, others see the rise being more in the region of 5%. Inflation has remained low, although there is some optimism that wages will rise between 2% and 8%

There is undoubtedly a correlation between wage increases and property increases, but it seems that people are finding ways to overcome the widening gap between the two. The Bank of England base rate remaining low, has had an impact on property buying. It is expected that the Bank of England will only lift interest rates 1.25 % before the end of 2017 and 2.25 % before the end of 2018.

Looking at the rest of the country in contrast, 33% of those interviewed in the North West thought their property would increase, but the majority 65% thought there would be little change. However, few considered that prices would drop in the near future. In Scotland there was a little more hesitancy, but in general people felt there properties were not likely to decrease in value during 2016.