The average house price in the UK has hit £250,000 for the first time according to the Office for National Statistics. The property website Rightmove says that asking prices are up nearly 7% and more loans are being given to first-time buyers. So the housing market looks to be in good health again, but can anything throw it off track?
On BBC Your Money, Henry Pryor a property expert, commented: "Well it is somewhat ironic that here we are 12 months away from the next general election and the government have been demonstrably feeding the housing market over the last year with various initiatives to make sure that it remains in robust health as we head towards that election. As you say, asking prices up 6.9% over the last year, sale prices up nearly 5% according to the Land Registry in a similar report today and the taxman just on Friday confirming that the number of houses sold in January was 30% higher than it was 12 months ago, so from that point of view it looks like good news."
So what impact have the government schemes such as Help to Buy had?
Henry Pryor,: "Well Help to Buy has been a huge stimulus to the building trade, very much the aim of Help to Buy one which was launched in April of last year at the budget, that has made sure that construction sites have been demothballed and that housebuilders are out there building more homes. But the danger and the warning signs that the market is very much alive are the recent reports that we've seen that housebuilders have been selling perhaps as much as 20% or even 25% of their new homes to people who have taken up the offer of government assistance. Now at some future date that will be withdrawn and when it is unfortunately there has to be the chance that house prices
and the market as a whole will then fall back."
Going back to that £250,000 figure, stamp duty will go up to 3% for buyers won't it?
Henry Pryor, housing expert: "Correct so we have this extraordinary situation where this slablike tax, something that has provoked a considerable amount of debate within the industry, has now reached £250,000 so people buying a house for that sort of money which is a phenomenal amount will face a 3% tax."
But there are things in the offing and we've got the Budget next month. What could trip up the housing market?
Henry Pryor: "Well it's not all good news. As you say in April we've got the Mortgage Market Review kicking in, it's a rather bland title for some new rules and regulations that mortgage providers are going to have to adhere to. They're going to have to be responsible for borrowers being able to afford not just repayments today but repayments when interest rates rise as undoubtedly they will and then in twelve months time overseas buyers of property which have been somewhat in the news very controversially over the last year particularly in London and the South East are going to face capital gains tax of 23%. Now that is expected to put something of a dampener on rampant house prices particularly in London and the South East. "