The Nationwide Building Society has released a report that shows that UK property prices are on the increase and a three bedroom semi-detached property is now worth an average of £197,000. This is an increase of 0.6% on September and an annual increase of 3.9%.
Many experts still talk down the property market in the UK but it looks as though there are a number of factors now playing a part and demand is still on the up. The growth in house prices in the UK is now at a 6 month high after a lull earlier this year.
In the UK, mortgage lending has increased by £3.6 billion in September which is up from £3.4 billion in August. There is an increase in demand for mortgages and this is against trend that many experts predicted but there are other factors to think about.
In recent months, there have been suggestions that the Bank of England could be increasing the UK base rates from 0.5% with many believing this would take place by the end of 2015 although this is unlikely. However, with the current Euro problems and economic instability these rises are unlikely with many predicting that no changes will be made over the next 12 months.
A large majority of the mortgages taken out over the last 12 months have been fixed rate. This is because homeowners are now looking for added protection from a possible increase in UK base rates. This is a wise move because the Bank of England do not know when the rate will increase. Opting for a fixed rate mortgage will help people to plan ahead even though any increases in the base rate will result in higher mortgages.
There have also been increases in wages throughout the UK and although they are not huge, when they are compared to low inflation it means that household incomes are slowly on the increase.
This helps to increase the power of those who are looking to acquire a mortgage and it also ensures that demand for property continues to increase. It is expected that property investment in the UK will begin to move from areas such as London and will look at other areas in the UK as these markets are better value for money.
Despite a number of experts being sceptical, the price of property in the UK is continuing to rise and mortgage lending is now reaching new highs and whilst inflation remains low and wages increase, demand for UK property should continue for some time. An important point to note is the number of new mortgages acquired over the past year being fixed rate which highlights the concerns that many have regarding the possible increase in the UK base rates.
It seems as though every time the Bank of England announces that an increase to the UK base rate could be imminent, another economic problem occurs throughout the world which means that further delays are added.