A report by Nationwide has confirmed what many property experts already believed, i.e. that the UK housing market is still relatively strong. The report confirms that the average house price in the UK now stands at £193,048 which is an increase of 5.2% over a 12 month period and 1% on the March figure. This is the highest average house price figure ever seen in the UK and while some concern has been expressed about the short to medium term political outlook, there is still underlying demand for UK property.
In many ways the relatively subdued activity in the UK housing market, which many people believe is a counter product of the ongoing election campaign, does not reflect the underlying strength of the UK economy. Even though yesterday’s GDP figures were disappointing we must not lose sight of the fact the UK has one of the strongest economies in the Western world. Therefore, the recent subdued activity in the UK property market could be masking strong underlying demand ready to emerge after the election is over.
House price performances
While the figure of 5.2% is perhaps slightly more than many had expected it is down on the 12% annual growth seen in June 2014. Indeed many experts believe that UK property prices will rise by around 5% during 2015 which in itself would be an impressive performance against the worldwide economic backdrop. It is also worth noting that 12 of the U.K.’s largest cities have for the first time in over a decade outperformed house prices in central London.
Time and time again in years gone by many people have suggested investors will bank their London property profits and move elsewhere. We have in some circumstances seen this to a relatively small degree although it is unlikely that the type of investor looking at high end high quality London property would look outside of the capital. Very often we are talking of individuals who have significant wealth behind them and in many cases money is not a problem. London will always be the centre of the UK property market.
Home ownership in the UK
We have seen the publication of home ownership rates across Europe during 2013 which placed the UK in 11th place with a figure of around 65%. This puts the UK behind the likes of Hungary, Norway, Spain, Greece, Portugal, Italy, Belgium, Ireland, Sweden and the Netherlands. There was another report released showing the percentage of young adults still living with their parents in 2013 with the UK again in 11th place at around 34%. These figures would suggest that a significantly higher proportion of young adults in the UK are renting their properties as opposed to buying outright or living with their parents.
It will be interesting to see how this trend varies in the years to come especially with political parties across the UK promising the earth to first-time buyers. Will we see a shift in the number of first-time buyers? Will the rental market remain strong? Time will tell…………….