House prices in the UK are soaring at a fast rate. They have been increasing at what official figures show as their fastest rate for more than over 10 years despite the whole country being gripped by the covid19 pandemic.
The biggest building society in the United Kingdom (Nationwide), described the UK housing market as "buoyant".
Potentially those who are first-time buyers and some home movers may have a feeling of a sinking ship, as they watch the likelihood of owning sail further away and out of reach.
Let’s discuss why this is what is happening.
Property prices in the United Kingdom have in general been rising since the financial crisis of 2008. The latest official figures, for March, show that trend has no signs of stopping.
The values of homes were 10.2% higher than the previous year - this is said to be the fastest annual rate of growth for 14 years.
Unlike other booms, the biggest price rises for the first time, have been outside of London and the South East of England.
Whereas, The least increases, have been packed around the central areas of Wales and England.
One recognisable boom area has been Cornwall which, according to Rightmove the property sales search site, has taken over London as the most popular search destination for property buyers.
Most of those who are looking to buy their first home are engaged in a race for space, according to Nationwide. Most want bigger homes with space so they have room to live and work, however, they are in short supply.
Many people have reassessed their priorities during Covid lockdowns and family homes are more popular.
The recent cladding crises of 2016 has made flats less attractive to buyers.
Saying that, prices of apartments are still rising - though at a much slower rate than houses -
All this means is that there are still lots of homes are being sold, certainly in comparison with the start of the first national lockdown when the property market was closed.
The biggest spike came in March when buyers and sellers rushed to find mortgages brokers to get a mortgage to complete deals before the stamp duty holiday expired in March which was extended to June.
This helped most people to save up to £15,000.
The rule of economics is as demand increases price increase so when demand for property from buyers is high, this will push up prices.
To top all of this, buyers having to pay more are also having to borrowing more. One mortgage broker says they are "maxing out" on what lenders some lenders will offer.
When rates are low mortgage borrowing will be more affordable to most.
That would make mortgage borrowing more expensive, putting some new property buyers who borrowed to their limit in financial danger.
An income shock, such as the loss of their job, could make that situation a perilous one.
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