Bristol housing and mortgage update
The latest house price index from Nationwide Building Society shows that property prices in the UK rose 1.1% in June reversing the previous 3 months decline and year on year property prices are up 3.1%.
Bristol remains one of the top Cities in the UK for house price growth. According to Hometrack the average property price in Bristol now stands at £266,700. Out of the 20 cities they track Bristol lies in 6th place with annual growth of 5.1%. Since 2009 Bristol has recorded the 4th highest growth of 65.9% only beaten by London, Oxford and Cambridge.
Two reasons for continued property price growth are the lack of housing stock and cheap mortgage rates.
Lack of Housing Stock
Many of the estate agents we speak to on a regular basis are reporting a severe lack of stock. At Fox Davidson, we have lots of client’s ready to purchase with mortgages agreed in principle and waiting to find their perfect home.
It seems that when a quality property comes to the market our clients are reporting that they are competing against several other buyers just as keen to have the same property. In hot spots such as Southville in Bristol we have personally seen our clients offering tens of thousands over the asking price to ensure they secure a property.
The Royal Institute for Chartered Surveyors (RICS) conduct monthly reports on the housing market. Their surveyor members contribute to the report to help build a picture of the UK housing market and sentiment. In their latest report in May the report states ‘A sheer lack of supply continues to support prices for the time being, and the sustained deterioration in new sales instructions over the past two years shows no sign of abating.’
Record Low Interest Rates
The Bank of England base rate is at an all-time low of 0.25%. The base rate had sat at 0.5% since 2009. In August 2016, following the Brexit vote, the rate was dropped to its current level of 0.25%.
It was 10 years ago this month that the banks’ monetary policy committee (MPC) raised interest rates to 5.75%. We have not seen a rate rise for 10 years. That means almost 8 million of us Brit’s have not seen a rate rise in our adult lives.
In the most recent meeting of the MPC the vote was 3 for raising interest rates Vs 5 against. When interest rates will rise is anyone’s guess and most economists’ forecasts get it wrong. What most economists agree on though is that when rates do change, they are only going to go up.
Check your mortgage rate
According to our whole of market sourcing results a typical mortgage rate for someone borrowing £200,000 on a property value of £300,000 (66% loan to value) are 1.3% for a 2-year fixed rate and 1.85% for a 5-year fixed rate deal. Anyone that is on a rate of interest above 2% should absolutely consider their options and speak to an independent mortgage broker.
Words by Wesley Davidson of Fox Davidson.
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