A new report from the Halifax shows average house prices are now over £200,000 pushed higher with a housing supply shortage.

For the first time ever, average house prices across the UK have exceeded £200,000 due to a rise in prices in June of 1.7%, reaching £200,280.

The annual growth rate in the 12 months to June was 9.6%, the highest rate since September 2014. The last peak of average housing prices was in August 2007 of £199,612, during an economic boom.

This high average price was swiftly followed by a collapse in the housing market, so it brings up the question whether the UK will have another housing market crash or not.

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.

UK housing stock is low

One contributing factor in this is the housing supply shortage, which has been pushing up house prices for the entirety of 2015, as well as an increased demand due to lower unemployment, low mortgage interest rates and general economic growth.

The Halifax report also shows that even though the housing stock is low, the number of homes sold is on the rise, by 1%, to 98,540 due to an increase in cash buyers in the market.

This shortage has increased the price of property making it less affordable for first time buyers to buy their first home and home movers to buy their next property.

Older remortgage buyers may reduce the supply of family homes on the market and avoid downsizing with the equity release mortgage buyer accessing money from their home for home improvements or holidays of a lifetime.

Higher prices also mean that buy-to-let landlords would require a larger deposit to buy and higher rental incomes to satisfy lender requirements.

Sales from March to May were up by 0.5% in comparison to the preceding 3 months, but are still down 4.2% from the same timeframe last year.

Prices in London rising the fastest

Price per square metre for houses have risen 18% since 2010 up to £2,033 with the price in Greater London growing at almost triple the national average rate, at 45%.

For remortgage buyers the higher house prices in Greater London will give them an opportunity to release capital by extending their mortgages which they can use to improve their home.

Smaller rises were experienced in places such as the North, only 3%, and Scotland with only 5%.

The ending of the unsettlement created by May’s general election created an increased interest in buying houses since the market has become less volatile.

The upsides for the housing market, however, are expected to be undermined by the downsides, since the ratios between house prices and earnings are stretching.

This makes it harder for first time buyers and home movers as there are more rigorous checks implemented by mortgage lenders preventing loans from being obtained.

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.

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.

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.

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