Average asking price to hit £300,000?
Will the End of the Year See the Average Asking Price for Housing Hit £300,000?
According to new research by Rightmove, the average asking price for a British home could be about to soar to £300,000 by the end of the year. Could this really come to fruition, and if so, why?
Largest September Rise in 13 Years
While the idea of a £300,000 average asking price for a property across Britain by December might seem out of the question, in September, there was an increase of £2,550 to £294,834, making it the biggest September rise in 13 years.
To break that down further, it’s clear that rather than the first time buyer market accelerating the growth in September, it was actually the family home market, which saw an average growth of 1.2pc.
Why might the first time buyer market have stalled, you ask? Perhaps because 2015 has already seen a staggering property hike of £10,000. Therefore, first time buyers, more than ever, are being priced out of the property-buying market.
The news follows the announcement that in the first eight months of this year, UK mortgage lending has surpassed the whole of the lending of 2011 (£138.3bn). In fact, in August 2015, mortgage lending was 1pc higher than in August last year.
Just in Time for Christmas
Rightmove’s House Price Index has revealed not only that September has been a challenging year for all house buyers (and in particular first time buyers), but also that if prices continue to rise at their current rate, the average price tag across Britain might be £302,484 by December.
According to Miles Shipside, of Rightmove, “High demand, lack of suitable supply, and increasingly stretched affordability are leading to some extremes in market forces in different sectors and parts of the country.”
While the Government and their opposition may have a number of plans to increase the house stock over the next parliamentary term and beyond, any actions begun here and now will have zero impact on those buyers looking to find a home in the very near (and perhaps even mid-term) future.
In London, things appear to be much worse, with September’s price hike reaching 2.2pc, while the average asking price of a newly-marketed home reached £620,003. In terms of the most expensive counties, the Rightmove data suggested that Surrey, Hertfordshire, Oxfordshire, Buckinghamshire and Berkshire are those most effected. Back in the capital, however, it might shock some people to learn that – if the acceleration of prices continues – the average asking price in London could quite easily hit £1m by the end of 2020.
Adding to his initial point, Rightmove’s Shipside added that “While we are not suggesting that this level of growth can or will be maintained, this extrapolation illustrates the desperate need for building and more affordable housing in and around the capital.”
A New Solution…
It doesn’t appear that the Government will act in the immediate future to alleviate the housing shortage and thereby reduce asking prices for houses. This means house buyers would need to take matters into their own hands. A solution might be to relocate to newer towns and cities where house prices are 12pc cheaper than the surrounding towns.
One popular example of this is Milton Keynes, where the population has grown by a massive 81pc since the 1960s.While moving to a new town or city does nothing to negate the problem with the property market, it might help you to avoid paying £302,484 in December for your next home.
Another increasingly popular solution for those in the buy to let mortgage market is to take out a bridging loan to help them afford the costs of their new property. The bridging loan market is about to breach the £3bn mark, and many are now taking advantage of this sort of short-term loan.
Of course, we don’t know for certain that the average British property price will reach £300,000 by December. Prices might come crashing down next week. Though that’s highly unlikely. Markets are unpredictable, though, and the rate of increase might slow or stop. We will have to wait and see.