Rising house prices nationwide in June, yet the housing market remains sluggish overall.
House Prices in the UK: A Mixed Bag
House prices in the UK have shown a mixed picture in recent times, with some regions experiencing growth while others have seen a slowdown.
According to the latest data, house prices in Scotland and Wales have increased by 1.4% year-on-year, while London and Northern England have seen a rise of 1.6% and 2.4% respectively. However, Southern England has experienced a slight dip, with a 0.3% fall in house prices year-on-year. The average home price across all southern regions now stands at £369,580, while the average UK home costs £266,064.
The highest increase in home prices has been recorded in Northern Ireland, with a significant 4.2% year-on-year rise. This trend is a positive sign for the housing market, which has been recovering from the hit it took in the wake of Liz Truss's mini-Budget in September 2022, when mortgage rates skyrocketed.
The Bank of England has been holding the base rate at a sixteen-year high since August last year, and higher rates have had an impact on the housing market. Mortgage transactions have fallen more than the total number of transactions, suggesting that higher interest rates are dampening the property market. Cash transactions, on the other hand, are now 5% above pre-pandemic levels.
The housing market has been a key issue in the ongoing political debate, with both the Conservatives and Labour making promises to support first-time buyers and homeowners. The Conservatives have pledged to permanently raise the stamp duty threshold for first-time buyers to £425,000 and deliver a new 'Help to Buy' equity loan scheme. Labour, on the other hand, has promised to extend the existing mortgage-guarantee scheme through its 'freedom to buy' policy and not match the Conservatives' pledge to permanently increase the first-time buyer threshold.
Mortgage rates are expected to be cut later this year, potentially as soon as 1 August. Some lenders have already started reducing mortgage rates in anticipation, including NatWest, Barclays, and HSBC. The temporary measure increasing the residential nil-rate threshold for regular buyers ends on 31 March 2025.
Meanwhile, in Germany, cities like Potsdam, Dortmund, Dresden, and Hannover have seen notable increases in apartment prices in 2023. Potsdam has experienced a price increase of 11.7%, while Dortmund has seen a 10.66% rise in apartment prices. Dresden and Hannover have recorded 9.58% and 7.2% increases respectively. Notable price increases are also observed in Starnberg (5.6%), Hamburg (4.11%), and Cologne and Düsseldorf with around 5.56% increases in apartment prices.
Despite these fluctuations, the average home price in the north of the UK remains lower than the national average, at £210,664. However, the average home is still almost £20,000 above affordability levels, posing a particular problem for those relying on a large loan to fund their next move, such as first-time buyers or those looking to upsize.
In conclusion, while the housing market in the UK has shown signs of recovery, higher mortgage rates continue to present a challenge. The political landscape also remains uncertain, with both the Conservatives and Labour making promises to support first-time buyers and homeowners. As we move forward, it will be interesting to see how these developments unfold and what impact they will have on the housing market.
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