play_arrow

keyboard_arrow_right

skip_previous play_arrow skip_next
00:00 00:00
chevron_left
volume_up
chevron_left
  • cover play_arrow

    Rother Radio (128k) Love Local, Love Music!

  • cover play_arrow

    Rother Radio (64K) Love Local, Love Music!

  • cover play_arrow

    Hit Music Radio (128K) More Music Variety!

  • cover play_arrow

    Hit Music Radio (64K) The Best Variety of Hits!

Business News

‘Race for space’ drives average house price above £250k for the first time

today03/11/2021

Background
share close

The average cost of a home has risen by almost £31,000 since the start of the coronavirus pandemic to hit £250,000 for the first time on record, according to a closely-watched report.

Nationwide Building Society reported an increase of 0.7% in October despite stamp duty reverting to its pre-pandemic level at the start of the month after 14 months of government COVID support for the market.

The mortgage lender said it took the cost of a typical property to £250,311, marking a 9.9% annual increase.

Experts suggested the continued growth was down to robust household saving levels, a lack of homes available for purchase and the “race for space” which was first witnessed after the first national pandemic lockdown in spring last year when house-hunters sought out larger homes with outdoor space.

 person walks past the Bank of England in the City
Image: Any increase in interest rates from the Bank of England would likely raise mortgage costs

But the outlook for prices is seen as uncertain given sharp increases in the cost of living, which is tipped by financial markets to lead to action from the Bank of England on Thursday.

The cost of mortgage deals has been rising in anticipation of a possible hike in interest rates from their COVID record low of 0.1%.

Any increase would be likely to be passed on to the small number of customers not on fixed rate mortgages.

More from Business

Robert Gardner, Nationwide’s chief economist, suggested there had been a rush to lock-in low rates in September as mortgage applications were more than 10% above the monthly average recorded in 2019.

But he added: “The outlook remains extremely uncertain. If the labour market remains resilient, conditions may stay fairly buoyant in the coming months – especially as the market continues to have momentum and there is scope for ongoing shifts in housing preferences as a result of the pandemic to continue to support activity.

“However, a number of factors suggest the pace of activity may slow. It is still unclear how the wider economy will respond to the withdrawal of government support measures.

“Consumer confidence has weakened in recent months, partly as a result of a sharp increase in the cost of living.”

He said a 0.4 percentage point increase in rates to 0.5% – seen by financial markets as possible next year – “is likely to have a modest impact on most borrowers who are on variable rates”.

“For example, on the average mortgage, an interest rate increase of 0.4% would raise monthly payments by £28 to £625 (or around £335 extra per year), though a rise of bank rate to 1% would see typical payments go up by a more substantial £64 to £660 (more than £760 per year approximately).”

Martin Beck, senior economic advisor to the EY ITEM Club, said of the picture ahead: “Household income growth is under growing pressure from higher inflation and forthcoming tax rises.

“And mortgage rates are rising, as lenders have responded to expectations that the Bank of England will raise the official interest rate, perhaps as soon as tomorrow’s meeting.”

 Sky News

© Sky News 2021

Written by: Rother Radio News


Previous post

Business News

Next warns of sales slowdown but says stock availability has ‘improved’ ahead of Xmas

Next has warned it expects sales growth to slow ahead of Christmas as household budgets come under pressure but reported an improvement in supply chain disruption that has limited stock.The fashion-to-homewares retailer's chief executive, the pro-Brexit Tory peer Lord Wolfson, had urged ministers in September to take "decisive action" by relaxing immigration rules to tackle the shortage of workers hampering the economy. The company had complained about a lack of […]

today03/11/2021