The fact disclosed by Halifax – Britain’s biggest mortgage lender – that the house prices went up by 2.2pc last month may be contradictory for some especially in the background of recent downward trend in this regard. Many wonder whether it is only a short-term sensation or will last longer.
Martin Ellis, a renowned group housing economist, has sighted the historically low volume of housing sales as the reason for fluctuating housing prices. The price has risen by 2.0pc in the last March and dipped down by 0.4pc in April.
However, the house prices in the UK are more stable and I am presenting some convincing figures that will speak volume for this statement. House prices in the first quarter of 2012 have gone up though by a slight margin as compared to what prevailed in the last quarter of 2011. The increase in house price is equal to the recoded fall between the third and fourth quarters in the last year.
The first time buyers were almost rushing to make the advantage of stamp duty before it expired by the end of March. This may have pushed the sales margin which has ultimately resulted into a forward movement of the house price. As far as the critics believe, the price will continue to shoot up provided the economy does not experience a lethal blow.
Nationwide, Britain’s biggest building society has exposed the fact that the house prices are significantly higher in the short run as compared to the long term trend provided the figure is calculated as the multiples of gross average earning. The national price/earnings ratio for the first time home buyers is 4.3 at present whereas the same ratio is as high as 5.1 in London. According to the market analysts, these high multiples will not sustain in the long run and drop by 20pc or more.
One thing to make a good note of is that the prices are steadily falling in other cities and it is in stark contrast of price rising in London. The current scenario shows all signs of house prices picking up throughout the country. The house sale has been continuously rising since 2009. 81,000 houses were sold in January and February this year which is 14pc higher than what was in the same months last year.
For some pessimistic personnel, the UK market will hardly take a surprise turn. Both marginal demand and supply in the real estate industry have dropped in the last few years, thereby making the UK property market as nothing but a shadow of its usual self. The real estate market always attunes itself with economic buoyancy and truly speaking, the UK economy is not in a great state. So rising house price in London is a logic-defining syndrome. Some are of strong hope that Government’s New Buy scheme will surely rejuvenate the real estate market; however they are going to the farthest end of their wildest imagination.