If average earners are to get on the housing ladder they would need to have seen their wages more than double over the last decade. This is despite the crash in 2008 and the subsequent problems that this brought with it. The property market has seen a significant recovery in prices whereas wages have seen very little growth. This means that property values are now totally out of sync with wages and average earners in London would need to see wages increase by £100,000 per year in order to buy in some parts of London. These figures have been put forward by Shelter, the housing charity that have carried out research from 1997 to the present date.
Since 2003 house prices on average have gone up by £1000,000. This compares to the annual average salary that has risen by just £6,750. If you take London and the south-east out of the equation the average house price across the country has risen by £73,000. You can see why house prices look very inflated when wages growth has been so low. Average earnings have a long way to catch up and house prices look as though they will continue to rise further particularly if there are not enough new affordable homes being built to satisfy demand
The Bank of England said today that it had finally hit the target for inflation that was set at 2% per annum. The news was welcomed by the government and business leaders who are keen to see the recovery continue so that Britain can get back on its feet again. The news will also be welcomed by homeowners that are worried about interest rates going up.
The low inflation rate means that the Bank of England is less likely to pit interest rates up in the short term. This is most welcome, recent figures suggest that half of all mortgage holders would face financial difficulty if the rates started to increase. This is a real concern amongst financial experts who point out that the base rate is at a record low and that borrowers should seriously consider theat the rates will be going up over the next couple of years.
Most homeowners will also welcome the fact that the housing market is likely to increase further in 2014. Prices rose an average of 8% across the UK last year and further increases are expected in 2014. At last it is good to see that things are on the move again and that we may at last have some growth.
House prices shot up in September, their fastest rate for 3 years according to data released by Nationwide Building Society. Prices were up from 3.5% in August and will be another reminder to the government that they need to keep a watchful eye on the property market according to analysts. These increases are the highest since July 2010 and many people are concerned that house price growth is running away again.
The Chancellor George Osborn has asked the Bank Of England to monitor the second phase of the Help To Buy Scheme that is being rolled out in January 2014. Currently buyers can only access this scheme if they want to purchase a new home but in January buyers of older properties will also be able to apply.
Bank Of England Continues To Watch Housing Market
he Bank Of England has said that there is not a property happening in Britain but that it would maintain it’s vigilance and would take the necessary action to calm the market if it felt prices were rising at unsustainable levels. The bank has said that it had a number of tools at its disposal to cool price increases but it did not want to increase interest rates as this would choke off the recovery in the economy. House prices rose 3.3% across Britain in the 12 months to July as a whole with London steaming ahead with an increase of 10%.
Labour To Build 200,000 New Homes Every Year
Many commentators are concerned that there is still not enough houses being built to satisfy demand and that prices could rise by more than the preferred 5% per annum. They are worried that the schemes that have been introduced by the government and the bank have led to many buyers coming into the market and not enough housing stock to satisfy the demand. They are also worried that the second part of the Help To Buy Scheme which will be rolled out in January 2014 will further fuel house price inflation.
The Labour leader has said that his party would build 200,000 new homes every year by the year 2020. It is argued that this would alleviate the house price increases and would also help many families that are simply unable to find an affordable home.
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- No housing bubble, but Bank of England says it is watching closely – Reuters UK (uk.reuters.com)
- How to spot a housing bubble (killerinvestorblog.wordpress.com)
Buy To Let Tracker Mortgages Changed
The West Bromwich have announced that they will be increasing interest rates on it’s tracker mortgages. In order to do this they are changing the terms of the tracker loans. The change only applies to biy to let mortgages and will mean a sharp increase in monthly payments. Angry borrowers have slammed the building society and said that they will fight the changes.
Increase Is Necessary According To Building Society
Despite the Bank of England base rates still at 0.5%, borrowers with buy to let mortgages will see payments increase sharply. Some borrowers will see their mortgage payments double at a stroke. The West Bromwich said 6,700 borrowers with but to let mortgages would be affected. These borrowers took out their loans in 2006 onwards and are on a variety of interest rates.
All of the landlords are owners of multiple property portfolios and have tracker mortgage accounts. The changes are being permitted under the terms and conditions of the account which allows the society the need to run it’s business, prudently efficiently and competitively.