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UK house prices have increased by 9.5% last year to a record high, says Halifax

Property prices are up 9.5% in the year and a further decline in the number of homes for sale will keep  upward pressure on prices.

The latest report from the Halifax shows that UK house prices have increased 9.5% in the three months to December 2015 compared to the same period a year earlier.

The lack of suitable properties on the market at an affordable price for home movers means they may delay trading up and saving for a bigger deposit.

Average house prices have reached a record high of £208,286 having increased by 1.7% in the month from November to December and are £18,858 more than a year ago.

For remortgage buyers higher average prices will mean they could release capital from their home which they can use to improve their home.

Affordability more difficult for buyers

Affordability is becoming an issue as average house prices are 5.58 more than the average full-time earnings of a male worker in December 2015.

This compares to 5.49 times recorded in November and 5.10 at the end of the previous year. The house price to earnings ratio is the highest level since January 2008.

Although house price growth in London is slower than the rest of the country, some areas are growth fast. Newham has experienced the biggest rise with prices higher by 22% over the year compared to 12% for London on average.

The biggest rise in house prices has been in areas in outer London or within commuting distance of the capital.

For first time buyers this means they need a larger deposit or higher earnings to purchase their first home. Also, home movers may find the gap between their current home and new home means they must secure a larger mortgage.

Family members can help home movers where equity release mortgage buyers access wealth to gift a child or grandchild as an extra deposit to buy their second home.

House shortages increasing pressure

Martin Ellis, housing economist for the Halifax has said there remains a substantial gap between demand and the number of properties available for sale.

This is unlikely to change in the short term resulting in an upward pressure on prices. Even so, house prices for the three months to December were 1.6% higher and this was the second successive sub 2.0% figure suggesting a slowdown in the rate of price growth.

New instructions from people selling their properties such as home movers or buy-to-let landlords fell for the ten successive months up to November.

This contributed to the eighth consecutive month of declining stock of properties available for sale and a new record low.

Despite the fall in housing stock, data from the Bank of England shows the volume of mortgage approvals for the three months to November increased by 16% over the same period a year ago.

What are your next steps?

Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.

Learn more by using the mortgage cost calculators, equity release calculator and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.

For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to improve your quality of life, pay for care at home or even buy a more expensive home.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

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    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


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