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UK House Prices Forecasts and Predictions for Home and Property in the UK at 19st January 2007
| UK House Prices Situation: Strong UK House Prices Forecast: Remaining strong at present. Slowdown in growth expected later in 2007. December Sees Increase in First Time Buyers First time buyers were responsible for 48% of mortgages taken out in December, in surprising figures from independent mortgage broker Mortgages Direct. The figure represents an 11% increase over the previous month, and would seem to reflect first time buyers' determination to get on the property ladder, despite the rising costs of buying a home. Peter Gladdy, director of Mortgages Direct, commented that the increase in first time buyers in December was "against all normal seasonal trends". House Price Growth Likely To Have Influenced Interest Rate Decision The Bank of England's decision to increase the base interest rate to 5.25% on the 11th January caught many people by surprise, with the widely-forecast increase having been expected to take place in February. Although the press release accompanying the interest rate decision did not mention the housing market specifically, it did express the Monetary Policy Committee's continued concern over inflation, which despite two previous rises in interest rates, remains at 2.7%, significantly above the Bank's 2% target. The Bank of England's economists are believed to be concerned that a bubble is forming in the housing market which could lead to a dramatic drop in prices – by raising interest rates pre-emptively, it may be possible to dampen the market more gradually, avoiding a repeat of the property crash of the early 1990s. RICS's Figures Indicate Decrease in Housing Accessibility The Royal Institute of Chartered Surveyors, RICS, has released new figures showing that not only are houses less affordable than at any time since 1991, but the costs of purchasing a house have also risen to record levels. Mortgage payments now account for 22% of an average couple's monthly income, up from only 13.5% in 1996. Similarly the costs of buying a house have risen – fees, taxes and deposit now require more than 81.8% of an average couple's annual income – up from 25.2% in 1996, and a 13.8% increase on one year ago. |
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