According to the most recent figures released by the Office for National Statistics, last year was a record year for UK property owners. House prices rose by £2,221 a month in 2014. This means that the average UK home is now worth £272,000; a 9.8% rise on the previous year.
Owning a UK property throughout the course of last year will have added on average an extra £73 a day to the value of your assets. This means that UK property has proved to be a better investment than almost any other asset class. What is more, insiders have predicted that prices will increase by a further 5% in 2015. This will take UK property prices to an all-time record average of £285,600. This leaves little wonder as to why this year mortgage lending is on course to reach yet another record; a staggering £225 billion will be borrowed in order to purchase UK property.
One of the reasons for the continuing growth of the UK property market is that demand for property, particularly in the south-east, is bigger than the supply. Experts have forecast that the growth will carry on until this trend has reversed. It is estimated that at least 500,000 new homes a year have to be built in order to satisfy the demand. However, last year only 122,590 new build houses were built; although the most for 6 years, it is still not enough to reverse the trend. When this is combined with the fact that for many owning a UK property, or even properties, will be their pension (and ownership of these properties will, therefore, remain with the same individual(s) for a considerable amount of time), the demand will continue for the foreseeable future.
Tough conditions for first time buyers
However, what is good for the goose is not necessarily good for the gander. The latest statistics, although most encouraging for UK homeowners and property investors, are not welcome news for first time buyers. Experts predict that prices will increase further in the coming months due to the recent Stamp Duty Land Tax reforms and low mortgage rates; thus, making it even harder to get on the property ladder.
In December 2014, the average purchase price paid by a first-timer was 9.5% higher than that the previous year. Another figure which has also risen is that of the average age of a first time buyer; this is now 30. The days of settling down and owning a property in your twenties appear to be getting further away. Nonetheless, 311,500 first time buyer mortgage totalling £45 billion were made last year. This is the most since 2007.
The data released last week by the Council of Mortgage Lenders and the Office for National Statistics certainly indicates that purchasing UK property will still provide investors with a good return. With wages rising, inflation falling, low mortgage rates and demand continuing to outstrip supply, conditions appear on track for 2015 being another record year for the UK property market.