House prices up by 9.7%, says Halifax
House prices in the UK have risen by 9.7% compared with January 2015.
The average price of a house in the UK now stands at £212,430 – up 1.7% since December 2015 when the average house cost £208,943.
Martin Ellis, Halifax’s housing economist, says: “The imbalance between supply and demand continues to exert significant upward pressure on house prices. This situation looks set to persist over the coming months.
“Further ahead, increasing affordability issues, as price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease.”
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Commenting on the Halifax House Price Index, Jonathan Hopper, managing director of buying agent Garrington Property Finders, says: “Slowdown? What slowdown? Such robust price growth in January suggests the property market hit the ground running after the traditional Christmas lull.
“With the quarterly rate of house price inflation breaching 2% again, and the annual level now within touching distance of double digits, there is clearly plenty of momentum in price growth.
“True, demand in the first quarter of 2016 is being stoked by a rush among second home and buy-to-let buyers to complete before April’s stamp duty hike kicks in. But the impetus this short-term factor provides is a sideshow compared to the fundamental driver of Britain’s relentlessly rising prices – a chronic shortage of supply.”
Jeremy Duncombe, a director at Legal & General Mortgage Club, shares this view: “Although house price growth may seem more subdued on a monthly basis compared to the more significant surges seen in previous years, it’s important to look at the long- term trends. House prices are still significantly up on the same period last year and are continuing to climb at a rate that far exceeds inflation and wage growth. This is eroding people’s ability to get on the property ladder, as the average asking price is rising faster than prospective buyers can save money for a deposit.
“This trend is likely to continue well into 2016 unless more properties are built to cope with current levels of demand. The government and housebuilders must work together to develop a long-term solution to this issue by implementing a range of measures to boost housing supply. At the same time, we need to ensure that there is an adequate supply of suitable properties for home-movers in order to create a more fluid housing market and encourage more efficient use of current housing stock.”
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).
The catch-all term applied to investors who buy properties with the sole intention of letting them to tenants rather than living in them themselves, with the proceeds from the let usually used for the repayment of the mortgage. Buy-to-let investors have to take out specialised mortgages that carry higher interest rates and require a much bigger deposit than a standard mortgage. Other expenditure can include legal fees, income tax (on the rental profits you make), capital gains tax (if you sell the property) and “void” periods when the property is unlet.