Average prices in UK up by over 40% since low interest rates were introduced in 2009

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Average prices in UK up by over 40% since low interest rates were introduced in 2009

UK owners have seen the average value of their homes increase by more than 40% and almost £60,000 over the past eight years since interest rates hit historic lows, new research has found.

Average property prices are up 41.2% since the Bank of England lowered interest rates to 0.5% in March 2009. They were then lowered again to 0.25% in August 2016.

The research from online estate agents HouseSimple comes at a time when there is a chance that rates could go up again as three members of the Bank of England’s Monetary policy Committee (MPC) voted last week for a rise due to inflation rising steadily. They were outvoted this time but it is an indication of the direction that the MPC is going.

Over the period since rates fell to 0.5% Cambridge has seen the biggest rise with prices up
96.7% from £224,469 to £441,527, followed by London with a rise of 90.8% from £278,186 to £530,751 and Slough up 90.1% from £160,774 to £305,649.

The analysis of prices in 100 towns and cities also shows that home owners in the South East have benefitted the most with seven of the 10 biggest property price rises since March 2009 in the region.

In London the borough of Kensington and Chelsea recorded the highest growth with a rise of 128.9% from £598,430 to £1,369,708 while the less glamorous boroughs of Haringey and Waltham Forest saw the next highest rise at 111.7% and 106.4% respectively.

At the opposite end of the scale Hartlepoole has seen prices fall by 9% from £110,231 to £100,291, while prices fell by 6.2% in Durham over the same period, by 4.5% in Middlesbrough and by 1% in Blackburn.

According to Alex Gosling, chief executive officer of HouseSimple, house prices are currently under pressure from the political and economic uncertainty of Brexit and the fallout from the general election producing a hung parliament.

‘There is no evidence to suggest that property prices are about to plummet, but home owners and home buyers do need to plan ahead, and make sure they can cover the impact of interest rate rises on their monthly mortgage payments,’ he said.

‘Many home owners will have never seen an interest rate rise, and may believe rates will never rise. But they will eventually, and when they do, we could see rates rise by 1% to 2% quite quickly. With many households already feeling the strain of higher day to day costs, monthly mortgage payments going up by several hundred pounds a month could tip them over the edge,’ he added.

Source: www.propertywire.com