House price trends have become something of a national obsession and little wonder, as whether you are a buyer or a seller, house price trends and the factors that influence them are crucial and can often make or break the deal. Since the success of surveys and mortgage applications depend on key issues such as the desirability, location and demand for the property you are thinking of buying or selling, researching the big picture in house price terms is the key to coming out ahead. We’ve put together the key factors in our House Prices Guide you need to consider and some quick links to reliable house price information.
Location, location, location!
This is still the prime principle in property buying. Location is decisive for house price trends and buying decisions. Be flexible about what you are looking for, if possible. Experts agree that it may be better to consider a smaller property in a more desirable area than a larger one in an area where houses are harder to sell. Upward and downward trends vary around the country, with location playing a decisive role.
National vs. local trends
It’s easy to find out about changes in the housing market nationally, and general factors affecting house prices can be relevant wherever you are: mortgage availability, support from government schemes such as the Funding for Lending Scheme (FLS), the Help to Buy scheme for first-time buyers and shared ownership, and supply of and demand for housing stock. But there are wide variations across the country, so researching local house price trends is essential, using local guides, local media and online guides. There is no substitute for visiting the area yourself, and driving, using transport hubs, and walking around to get a feel for what properties and facilities are available locally. House price inflation has created wealth for many long-term residents in Greater London and elsewhere. But, for younger people, rising house prices represent a drain on income, already bespoke for e.g. the repayment of University fees, such that owning a home may be possible only for those with parents whose estates included or will include valuable properties. Many young couples will have little option but to rent and many will depend, even so, upon two incomes to do so, at the expense of having children. No wonder that house prices are a national obsession served by numerous house price indices, forecasts, expert commentary and blogs, all given media space. But what can the public make of house price indices that go up one month and down the next and which frequently contradict each other, within a day or so of publication?
London still drives the market
The strength of the London housing market has an impact on national house prices, yet prices in London can be radically different from those in other parts of the UK, especially Scotland, Wales and the North of England. Although this has been a constant feature, London house prices have gained significant ground again in 2013, and average asking prices for homes have risen to above £250,000 for the first time in the South East. This has led to price increases in every region of the UK in the first 6 months of 2013. In London itself, house prices rose to a new high in this period London and the South East are now seen by house price experts as a market in itself, distinct from the rest of the UK. House price inflation, driven by London and the South East, has created wealth among long-term residents of those areas, but can create difficulties for buyers elsewhere, and for prospective first-time buyers, such as those committed to university fee repayments.
Making information work for you
There is a lot of information available on house prices and market trends. That is generally a good thing, but to make the best use of the information available, you need to make it work for you. Look at the bigger picture, but consider what is important in your own situation. For example, steep rises in London house prices may affect the markets elsewhere, but look at the impact on the location and type of house you are planning to buy. Are you a first-time buyer, or someone looking to downsize? Housing experts point out that although house prices are rising strongly in 2013, weak earnings growth and low consumer and lender confidence still affect people’s ability to buy. Seek out the news that is relevant for you, and get advice about how latest trends are likely to affect you, and the prospects of finding your ideal property at a price that is right for you.
Think ahead/ stay ahead
Being aware of house price trends helps you stay ahead of the game in a changing world: in a slowing market, you can consider looking at houses above your budget and negotiating on the price; if you know an area is about to take off in house price terms, it may be advisable to move quickly, and you will know that mortgage lenders may be more open to negotiation on mortgage deals. Understanding property price trends also helps decide on the type of mortgage to go for, a crucial long-term finance issue for buyers.
Reliable house price information
There is plenty of information available online, but it’s best to check with established and reliable guides to house price trends: The UK Land Registry House Price Index has data based on all UK house sales, though published with a slight time lag and excluding auction sales. The Halifax House Price Index is a commercial index based on mortgage valuations and is the UK’s longest-running monthly report on national house prices, compiled since 1983: