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UK House Prices Predicted to Continue To Rise
The UK’s second largest mortgage lender, Nationwide Building Society, said house prices would continue to rise this year beyond the stamp duty holiday but warned higher costs could make it harder for first-time buyers to get on the property ladder.
BY
Realty Plus
Published - Tuesday, 25 May, 2021
The UK’s second largest mortgage lender, Nationwide Building Society, said house prices would continue to rise this year beyond the stamp duty holiday but warned higher costs could make it harder for first-time buyers to get on the property ladder.
Its chief executive, Joe Garner, said everyone had been a “little bit surprised” by how strong the housing market had been throughout the Covid crisis, even when taking government support, including business loans and wage subsidies, into consideration.
Figures published by the Office for National Statistics this week showed house prices rose 10.2% in the year to March, the highest annual increase since the lead-up to the financial crisis in August 2007.
A Nationwide survey of homeowners last month found that 25% were either considering, or in the process of, buying a house as a result of the pandemic, compared with 28% in September. Usually, only about 5% of homes switch hands in the UK, meaning that only a small portion of those homeowners need to act in order to keep the housing market moving.
That sentiment is backed up by house-buying data published by Revenue and Customs on 21st May. While property purchases were down 38% in April compared with a month earlier, it was still the highest total for April since 2007, with 111,260 transactions. Nationwide’s core forecast predicts prices will continue to edge higher over the next five years. “Of course that’s positive if you own a home today. It’s less positive if you’re trying to buy your first one,” Garner said.
And while a number of lenders have re-entered the 95% mortgage market, making it easier for first-time buyers to come up with a deposit, they could be thwarted by lending caps introduced by the Bank of England in the wake of the 2008 financial crisis. Lending limits introduced in 2014 cap the amount of home loans worth more than 4.5 times a homeowners’ income to 15% of a bank’s total mortgage lending. The central bank’s deputy governor Sir Jon Cunliffe warned on Thursday that those limits “would certainly have a stronger impact” if prices continued to surge.
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