Higher rates will have ‘modest effect’
Last week’s decision by the monetary policy committee (MPC) of the Bank of England to raise interest rates by 0.25 per cent will have only a ‘modest’ impact on the housing market, according to Martin Ellis, chief economist of Halifax, the UK’s largest lender. The MPC opted to raise rates in an effort to take the steam out of what many believe is still an overheated housing market. However, says, Ellis, the average mortgage of £80,000 would cost only £4 more each month, an increase that is easily absorbed by home owners, he said. ‘The housing market remains strong and is still underpinned by strong fundamentals.’
House prices rise
According to the latest figures from the Land Registry, house prices have risen by 10.62 per cent in the past year, with the average home in the UK now costing £161,665. The Land Registry’s figures are considered among the most reliable measurements of house price trends, as they are based on all properties registered during a given three-month period, and every property purchased is required by law to be registered.
The latest survey period, from July to September of this year, shows fewer sales than in the same period last year across most regions nationwide; in Greater London the number of sales fell by 18 per cent.
Although the highest rises were seen in the North, where prices have leapt by over 24 per cent this year, London and the South East have also seen growth. The average house price in London has now topped the quarter-million-pound mark, at £262,044. The number of £1 million-plus property sales in London, having been hit by market uncertainty earlier in the year, was 522 between July and September, compared to 338 between April and June. Prices in the London commuter belt rose by up to 13.6 per cent, while Newham was a big winner in the inner London property stakes, with a 19 per cent average price rise reported.
Meanwhile, Halifax pointed to a 1.2 per cent rise in national house prices in October, and Nationwide came up with the more optimistic figure of a two per cent rise in the cost of the average house last month, pointing to a market that is again accelerating.
‘No stamp duty’ for first-time buyers
With growing speculation regarding rises in stamp duty, the National Association of Estate Agents calls for first-time buyers to be exempt from the tax.
Peter Bolton King, chief executive of the NAEA, says: ‘In a buoyant housing market stamp duty at its present levels might be sustainable. But the market is slowing and the Bank of England itself has predicted that house price inflation will hit zero next year.’ King lambasts the current system and says it discourages first-time buyers. ‘The graduations in the tax from one per cent for houses worth £60,000-plus to four per cent for houses over the £500,000 mark are now ridiculous and include more first time buyers than ever.’