Posted February 01, 2014 Chris Peters
Prior to 2013 house prices increased predominantly in central London Boroughs due to an influx of cash-rich buyers. However, the housing market remained sluggish in other areas of Britain. This was partly due to the difficulty encountered by potential buyers in finding mortgages. Moreover, falling wages, economic uncertainty and the memory of falling house prices during the crisis also reduced people's intention to purchase property.
The situation changed in 2013 in that house prices rose by 6.8% according to the Office for National Statistics. Although the house price was still fastest in London (13.2%), the housing market inflation spread to other boroughs such as Brent where prices rose 31%. Average house prices in London have cleared half a million for the first ever time.
However, Britain's housing market may be about to plateau. According to a recent update by Nationwide, house prices have just fallen for the first time in 17 months. They dropped by 0.2% in September. This served as new evidence that the housing market is cooling.
Average house prices will also drop for the first time after growing by an estimate of 7.8% this year. Inquiries from new buyers are already declining. In addition, tougher mortgage eligibility criteria, high deposit requirements and concerns about future interest rate rises are taking the steam out of the housing market.
Despite the fact that the house prices are believed to fall in 2015, a new survey by Rightmove with Oxford Economics predicted that UK house prices would rise by 30% over the next five years, going against the short to medium term trend forecast.