While there is much speculation regarding the short to medium term direction of UK base rates and the economy, it seems there is no doubting the ongoing rise in UK property prices. Indeed a report by Rightmove suggests that the average property price in the UK could top £300,000 by the end of 2015. This would be a phenomenal rise with the average London property price set to top £1 million by 2020!
Average house prices today
The average house price across the UK today is £294,834 after a very impressive increase of £2,550 in September alone. This will surprise many people who have been predicting a fall in UK house prices in the short to medium term against a backdrop of challenging economic scenarios across the world. However, it does seem as though the UK property market has a mind of its own and is set to push further ahead in the short term.
There is speculation as to whether we will see a holiday season impact on UK property prices which have historically led to found flat markets over the holiday period. The fact that we are moving towards the end of the holiday period with little impact so far, although approaching the often quiet year-end, seems to be going against the historic trend but time will tell.
Even though the UK economy is struggling to find any real momentum it was interesting to see an increase in average household incomes, more buyers emerging from the sidelines and fewer properties for sale. In many ways the UK property market is moving in a totally different direction to the UK economy, in terms of momentum, although many people have been waiting for the “inevitable” increase in sellers.
We have some varied forecasts for 2016, with 2015 set to post property price growth around double initial expectations at the start of the year, as the UK property market is proving more difficult to predict. Historically as and when any investment asset moves beyond “reasonable value” we do tend to see sellers emerging from the sidelines. This can then have a knock-on effect of reducing the number of buyers and bringing the market back down to more “affordable levels”. However, so far there is little sign of such developments hence short to medium term optimism for UK property.
Regional property price variations
At this moment in time properties in Greater London are valued at an average of £620,003. As you might expect, the south-east of England comes in second place with properties valued at an average rate of £386,685. If you move towards the other end of the spectrum the north-east of England is bottom of the pile with the average property valued at £144,219 with Yorkshire and Humberside just above the north-east at a level of £171,733.
It is no surprise to see this excessive regional variation because in many ways the UK property market is highly segmented. In reality we have an array of smaller independent localised property markets which very often bear no resemblance to other parts of the country. However, there are hopes that this general uplift in UK property prices will drag the likes of the northeast, together with Yorkshire and Humberside, to higher ground.