More great news for property prices in the capital, according to a report I came across from Reuters. Early estimations suggest house prices will see a further 6% rise next year, on top of this year’s forecasted 9% growth, with London properties carrying the country average upwards.
With official figures showing the average price of a house in London at around half a million pounds, a poll conducted by Reuters highlighted how predicted trajectory will see homes in the capital become even further out of reach for many buyers – especially first-time buyers without a spouse or partner.
In the poll of experts and analysts, in which one is very undervalued and ten is very overvalued, the consensus was nine for London. It also gave a UK-wide consensus of six on the scale, indicating there is general concern for the affordability of housing across the board.
However, the lofty increases could be curtailed if the Bank of England (BoE) tightens monetary policy as anticipated. With benchmark interest rates having sat at 0.5% since March 2009, many people believe it will be upped in the first part of next year, which will have implications on how people manage their money.
David Ritchie, chief executive of house building firm Bovis Homes, says this will help businesses like Bovis achieve long-term sustainability. “If house prices (outside London) cool to something more in line with inflation, so 1 to 2 percent per annum, that would be perfect for us,” he said.
With further increases to the base rate expected – on top of the initial rise – mortgages will inevitably be more expensive. James Kingdon, a property consultant at GVA, warned that many households will have to “significantly adjust spending” as the rates go up.
What do you think? Are you waiting for the right time to jump on the property ladder?