Property prices are rising, or are they?
Arthur looks to dispel some of the myths and explain some of the numbers that have meant it appears the property market is both improving and getting worse.
From a purely statistical viewpoint, yes the asking price for properties is increasing. The average asking price increased by 2.8pc over 2016. Whilst this is an increase, it is not at a very fast pace, especially compared to previous years; this has led to some pointing to a slowdown. However, others have pointed to the massive hit house prices took after the Brexit vote June; since then property prices have done well to recover and even surpass what they were at the time of the vote, thus leading to others suggesting that property prices are in fact soaring. In reality, housing prices appears to be rising at a fairly steady rate.
Despite this, it appears that the public is becoming far more discerning, with estate agents reporting that buyers were far less interested if a property was marketed even 5pc too high. This coupled with 20pc of homeowners believing that their house has increased in value has led to a bit of stagnation, or so it would seem – there is more conflicting data.
Last year, first-time buyers borrowed more money than ever before. Their numbers increased by 8.4pc and they borrowed £74.2bn, giving a much needed boost to the housing market as they total number of home-movers dropped by 2pc. There are many reasons this could have happened, with some savvy first-timers taking advantage of the drop in prices after June and others taking advantage of systems such a help-to-buy and good mortgage rates. The only number that should really be taken heed of here is the increase in first-time buyers and decrease in home movers. The increase in borrowing can be placed at the feet of higher property prices (around £15,000 year on year) and higher inflation rates.
With such a strange year last year, it is easy to spin the numbers any way you want to. At the moment, property prices are increasing, as is the amount of first-time buyers and it appears that current homeowners are taking their time whilst they decided on their next move.
