Property prices have continued to grow since the election with annual growth at 5.1% and set for a surge for the rest of the year.
Data from the Land Registry shows house prices are 0.9% higher since March increasing the average property value in England & Wales to £179,817.
The rise in April is after a drop of 0.8% in March and the possible cause of this is the end of the general election.
The election created uncertainty amongst buyers and sellers, and has now revitalised the housing market since there is a secure and stable government.
However, economists have stated that these conditions are ripe for a housing market boom, which would cause house prices to rapidly increase.
For home movers wanting to trade up when prices are rising, they may find their next property is more expensive which means they need a larger deposit or mortgage.
London prices rising the fastest
Average prices across the UK are already only £1,200 below their peak in 2007, before the financial crisis. If a housing market boom does occur and house prices are pushed up, a bubble could result in a large crash in the market.
Semi-detached homes are the type of houses with the greatest increase in price over the past year, rising 5.6%.
London’s prices are rising 10.9% over the past year, whereas the prices in Wales and Scotland fell 1.1% and 2% respectively.
For remortgage buyers the higher prices in London give them an opportunity to release capital if they wish and use this for home improvements.
For people living in London such as first time buyers looking for their first home and home movers buying a larger property the rise in prices makes it harder to afford the larger mortgage without a larger deposit.
Due to these rising house prices, sales had a huge drop of 17% according to the Land Registry, especially for £2 million plus houses. Owners were likely to have feared the introduction of the mansion tax threatened by Labour and others.
Higher property values for older homeowners allows the equity release buyer to access cash using a lifetime mortgage and maintain their lifestyle, or gift a child or grandchild the deposit on their first home.
Property market slowing down
It has also been suggested that “the broader fall in the number of property transactions over the last year suggests a natural slowdown in the property market after a period of exuberance”.
Howard Archer of IHS Global Insight believes that house prices will grow by 6% in 2015 “partly due to the increased upward impact on prices coming for a lack of properties on the market.
We also suspect that the housing market will benefit from reduced uncertainty following the decisive general election result.”
On the other hand, Matthew Pointon believes that even with increased sellers, the prices wouldn’t get any better, because “any new supply is likely to be matched by demand.”
What are your next steps?
Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
Learn more by using the mortgage cost calculators, equity release calculator and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.
For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to help maintain your standard of living as costs rise.
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