Hello, and welcome back to the Experience Invest blog, where we provide you with the latest UK residential property news. This week we look at new figures from Halifax Bank which suggest that British house prices will grow at a more moderate rate in 2016, compared to this year.
Sustained house price growth
Data from the Office for National Statistics (ONS) indicates that average UK house prices grew by 7.0% in the year to October 2015, up from 6.1% the month before. However Halifax were even more optimistic; they found that average UK property values shot up by 9.7% year-on-year to October 2015, the highest annual growth since August last year. This defies the bank’s original expectations that average UK house prices would grow by between 3% and 5% this year.
Outlook for 2016
The International Business Times reported that the mortgage provider recently released its residential property market outlook for next year. Halifax wrote that expectations that interest rates will go up in the next few months, combined with an increasingly difficult to enter property ladder, will “put the brakes” on UK house value growth in 2016.
The bank predicted that average UK house prices would grow by between 4% and 6% in the next 12 months. They expected residential property market activity to be restrained because of a continued lack of supply. The Telegraph reported last month that UK housing supply is now at its lowest level since the 1970s. Halifax suggested that even Chancellor George Osborne’s plans to build around 400,000 new homes next year won’t be enough to boost supply.
Speaking about the outlook report Martin Ellis, Halifax’s housing economist, argued that it’s unlikely that the key drivers that aided house price growth this year will change. The economist insisted that the “substantial imbalance” between residential property supply and the ever-increasing demand for housing, will hold steady for at least another year.
Commenting further, Ellis said: “On average, UK house prices look expensive compared to incomes but valuations are supported by the low levels of property for sale, low levels of housebuilding, and exceptionally low interest rates.” The bank noted that despite soaring house prices, many first-time buyers are keen to get onto the property ladder because interest rates are so low right now.
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