After learning that the cost of a typical home in London is £514,000, first time buyers are probably crying their eyes out and shaking their fists at the moon.
A market being pushed to the brink of madness by opulence, financial freedom and luxury is fine for the privileged few but for a first time buyer looking to settle in London then our glorious capital is a bridge too far.
Statistics published for July show that the cost of a typical home in London has risen by more than 19% over the last 12 months. If you look at this graph below from the Office for National Statistics (ONS) it shows that average house prices across the country have risen by some 11.7 % in the year to July. This means that nationally the average for a home has now reached £272,000.
However, some are saying that the UK housing market is cooling off citing heavier stamp duty burdens and lack of new builds. Others say that people are just not able to find the money for their deposits, administration charges, solicitors fees and every other damn thing that the scallywags in the property business can think of charging us.
Richard Snook, a senior economist at PricewaterhouseCoopers (PwC) said:
“We still expect UK house price growth for the year as a whole to come in within our projected range, around 6 to 10 per cent, but it’s currently on course to be towards the upper end of this.”
While the south east of England saw double digit rises London has seen the strongest growth in prices in the year to July according to the ONS. (see below)
Martin Beck, a senior adviser to an independent economic forecasting group, said that the data could cause some headaches for the Bank of England.
“The housing market continues to present a complication in what is otherwise a fairly benign environment for monetary policy”.
Figures produced by the Council of Mortgage Lenders show that the average first-time buyer has a salary of £51,500 and takes out a loan worth 84 per cent of the value of a property. Those loans were approximately 3.41 times their income. A typical deposit on the average home is £33,400.
According to research by the housing charity Shelter many parents are now having to help their adult children on to the property ladder. Typically they are handing over £23,000, which eats into the money they may have set aside for their retirement.
The research was published just 24 hours after the National Housing Federation claimed that home ownership was rapidly becoming an “exclusive members’ club”. They also said that today’s first-time buyer often needed a deposit equating to ten times that required in the 1980s.
Barclays Bank thinks that the strong increase in house prices serve to support their view that the Bank of England will increase interest rates sooner rather than later in a desperate effort to cool the market down. Well if that isn’t the gift of a dusty bag of peanuts lying on a discount shelf at Costco, then nothing is. All hail to the Bank of England.