Four facts you didn’t know about the UK property market

The British property market has seen a wave of changes over the last couple of years, especially following on from the recent financial crisis, and slowly beginning to change after the Mortgage https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpget Review that was carried out in April, 2014.

For example, some feel that it was the irresponsible mortgage approvals that some lenders conducted that, to a degree, played a part in the unfolding of the financial crisis.

The demand for homes is slowing

Housing demand has slowed due to the threat of an impending rate increase. Major lenders Nationwide and Halifax have released figures that show the contrast from the first six months of the year, and the current slower pace of homebuyers and slow-rising house prices. The balance between supply and demand is more even, which has relieved some of the pressure on increasing house prices, particularly in London.

There are a number of factors behind these changes, including the stricter regulation imposed on lenders by the Financial Conduct Authority, meaning tighter affordability checks, along with the anticipated rate increases that are predicted to happen as early as 2015.

New regulatory powers could be imminent

The Bank of England is looking to acquire additional powers, enabling it to enforce lending limits, to help keep the financial system stable, and prevent the creation of any potential housing bubble.

It has requested the powers, which would mean it could affect the loan-to-value (amount borrowed compared to property value) of both residential and buy-to-let borrowers. The Mortgage https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpget Review has already seen a number of changes imposed on lenders, but the additional powers would enable the Bank of England to guide and implement changes to lending policies.

The buy-to-let market currently remains the same and Chancellor George Osborne is reported as saying after a recent meeting of the Financial Policy Committee:

“I was pleased to see the committee’s conclusions that the scheme does not pose material risks to financial stability in the UK and has not been a material driver of recent house price growth.”

House prices are rising above their pre-crisis peak

The Bank of England’s base rate has been at a record low of 0.5% for several years now. The last couple of years have seen house prices begin to rise again, but recent findings from Nationwide revealed that the UK property market may be starting to slow after a reported fall of 0.2%, for the first time in 17 months.

It is important to note, however, that there were wide regional variations, with London reporting a 31% increase above their peak in 2007. As a whole, British house prices are still approximately 2% above their pre-crisis rate.

Help to Buy may not be working

The Help to Buy scheme introduced by the current Government was presented in an attempt to increase the supply of assets within the property market, by helping those struggling to source the deposit needed to purchase their own property.

However, it is felt by some people that it has the opposite effect, by pushing prices up and making them even more unaffordable when combined with the strict affordability criteria.



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