For the first time, the average house price in the UK has jumped to over £196,000 in October, with month-on-month property values increasing by 0.6% across the country.
According to October reports from Nationwide Building Society, house prices are up 3.9% from the previous year, increasing from the 3.8% annual growth observed in September.
Chief economist for Nationwide, Robert Gardner, noted that the past five months have seen a somewhat narrow range of price growth of between 3% and 4%, which “bodes well for a sustainable increase in housing market activity”, but also points out that this increase in activity will depend on whether building activity can keep up with the increasing demand.
In line with these figures is a report from the National House Building Council (NHBC), which highlights figures showing that new home registrations with them are 9% higher than last year, and is showing signs of being their most productive year since 2007.
With the low interest rates keeping mortgage repayments at an affordable level for home buyers, buyers are finding themselves in a better position to afford higher priced properties, however it is important that buyers consider their ability to repay variable mortgages if interest rates rise in the near future. It is this concern that has more and more buyers opting for fixed rate mortgages in recent months, keen to lock in a low rate while they still can.
Fixed rate deals are proving especially popular with first time buyers, who seem to place more importance on consistent monthly repayments, however the recent influx of fixed rate mortgages are mostly for shorter (two year) terms. Bank of England has however provided guidance that interest rates are likely to increase gradually, which should help minimise the impact on borrowers in the near future.