New Average House Price Figure

The overall quarter on quarter UK house price increased by 1.3%, although the percentage is actually 1.4% if you only consider Scotland and Northern Ireland. The numbers then drop significantly if you isolate either England or Wales, with the former seeing a rise of 1.1% while the latter’s average house price has only increased by 0.2% during the recent third quarter.

All together, the recent rise means the average price of a home in the UK now stands at £206,015, though of course this number will fluctuate massively according to each region.

The Chief Economist of the Nationwide Building Society, Robert Gardner, spoke about the causes behind the rises, identifying the levelling out of supply and demand as a key factor. He said, “The relative stability in the rate of house price growth suggests that the softening in housing demand evident in recent months has been broadly matched on the supply side of the market. While new buyer enquiries have remained fairly subdued, the number of homes on the market has remained close to all time lows, in part due to low rates of construction activity.” He added that regional price trends had also seen little change.

Number of New Homes Increases, But Still Not Enough

On the subject of new homes being built to meet the demand of a growing population, Mr Gardner continued, “The number of new homes built in England has picked up, but is still not sufficient to keep up with the expected increase in the population. In the four quarters to the second quarter of 2016, some 139,000 new houses were completed [which was] 30% higher than the low point seen in 2010. However, this is still around 15% below the average rate of building in the five years before the financial crisis and 38% below the 225,000 new households projected to form each year over the coming decade.

“With interest rates expected to remain low and schemes such as Help to Buy helping to provide those with smaller deposits access to finance, house builders should have confidence that there will be sufficient demand from buyers if more homes are built. The major house builders appear to have capacity to expand output, with most reporting land banks that could support around five years worth of construction at current rates of building activity. There is a risk that the uncertain economic outlook may weigh on activity in the period ahead.”

Indeed, it seems that the UK may find itself with a supply problem in the years to come if house building does not increase to meet the growing demand.



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