Mortgage UK -> Articles -> House Price Inflation Stays Strong

The stories behind strong increases in house prices revolve mostly around the London area. With an estimated rise of 1.2% within the capital, house prices in the remaining counties appear to remain relatively static. The developing separation between London and the rest of the country in terms of housing growth and price means that surrounding counties need not read too much into worrying house price headlines. Those in London who own a property will be content to here that the market is strong, as their investment will continue to rise in equity. Those, however, who are looking to purchase for the first time will continue to struggle getting a foot on the property ladder.

Even second time home buyers can’t afford to purchase a new home. Having realised they are unable to take the next step up the property ladder; half of owners are planning to stay in their existing homes and build extensions instead.

The main issue, as always, is money. Homeowners wishing to move to a bigger and better place simply cannot afford the mortgage repayments needed to purchase a bigger house. On top of the cost of buying there is the sometimes overlooked issue of legal fees and stamp duty.

Worryingly this could create a bottleneck within the housing market with people deciding to stay in their homes. About half the UK population own their homes through a mortgage and an estimated 25% own their home outright

With summer solstice approaching marking the half way point in the year the housing market looks set to slow. A turbulent equity market alongside rumors of an interest rate increase could have a major impact on buyer confidence in the coming months. The world cup has already made its impact by slowing housing activity all round so expect a pick up when either England get knocked out or, fingers crossed, win the world cup. House prices are estimated to rise by only 3% for the whole of 2006.