At the beginning of this year there was much scepticism when it was announced that house prices were increasing, and many people believed that it was just a minor improvement that wasn’t around to stay. However, we are now in the fifth month of 2013 and house prices have been increasing by around 2.1 per cent month on month, meaning that the average price of a house has now increased by an average of ten per cent.
Unsurprisingly, properties in London are now worth around half a million pounds, which means that they are now double the amount of the average UK home and have increased in price by 8.6 per cent since the same time last year. It is believed that the improvement in the property market is all down to cheap mortgages and government schemes that are helping first-time buyers get onto the market, which is making some people concerned that this bubble could burst in the future.
Discussing the figures, Mr Shipside from the property website Rightmove said: “Despite a new national record, it’s not ‘green shoots of recovery’ across the board, especially for the deposit-strapped mass market. They must wait patiently until January, when the Help to Buy scheme extends to the resale market, unless new homes developers can increase building dramatically this year.” The fact that the Help to Buy scheme only applies to new properties has previously been contested by members of the public and MPs, especially as there are fears there are not enough of these properties to meet demand.
Furthermore, new build properties are more prevalent in built up areas, most of which are already suffering from overpopulation, and so the scheme could lead to the problem becoming even worse in areas such as London. Many have therefore argued that even though the Help to Buy scheme will help when it comes to improving the property market, unless the government works to improve the private rented sector at the same time the country could end up back in the same situation it started in.
Furthermore, as property prices are increasing landlords may soon have to start asking for higher rent payments from their tenants, especially if they have a variable mortgage or their landlord insurance policy increases in order to cover the increased value of the properties. Therefore, while some may be celebrating over the improvement of the property market, if the government is not careful it could fall flat again very soon.