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Are house prices rising?
All Areas > Legal & Finance > Money Matters
Author: Roger Downes, Posted: Tuesday, 22nd October 2024, 09:00
So, what is going on in the housing market just now? It’s been slow for much of this year, but recent signs indicate that house prices are on the up again. The latest reports from Halifax and Nationwide suggest that average house prices are approaching record highs. Why the initial lull and now the surge in activity?
Inactivity is generally the result of uncertainty and there has been plenty of that in the housing economy in 2024. It was led, of course, by interest rates, which have remained at a base rate of 5% plus since the summer of last year. Anyone wanting to buy a house or re-mortgage an existing one has been praying for the upward trend to reverse. The Bank of England threw them a tiny bone in August with a 0.25% reduction but there has been nothing more since and certainly nothing substantial.
Economists are widely predicting a reduction in interest rates
Many commentators think we are on the brink of seeing rates fall, especially with inflation relatively stable in recent months and somewhere close to government targets. Surely they can only go in one direction from here? A further review is due early this month, with economists widely predicting a reduction. We’ll soon see.
Uncertainty has also been caused by changes or anticipated changes in the tax system. Buy-to-let landlords have steadily lost out to the tax man over the last few years to the point where many are questioning whether it is all worth while. But apparently that’s what the government wants, so don’t expect much of a reversal of these rules any time soon.
And then there were those who were waiting for the new government’s first Budget last week. More uncertainty and consequent inactivity.
Confidence is returning
Mortgage lenders are reporting significantly greater numbers, both in terms of volume and value of transactions. Wage growth is still outstripping the increase in house prices.
Confidence is returning and if those interest cuts happen, it can only get stronger.Copyright © 2024 The Local Answer Limited.
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