The UK property prices have surged to reach a five-year high, with asking prices rising 2.8% in February to £235,741, the highest figure for the month of February since 2008, up by 1.1% on an annual basis, as reported by Rightmove House Price Survey. Rise in inquiries from potential buyers have led to the sky-rocketing prices in the UK real estate. Contrarily, London property prices gained just 1.2%, the smallest increase for a February in four years.
The UK housing market activity has been boosted by new properties being put up for sale after a dearth of transactions over Christmas. But in London, although the average asking price reached a record £486,890, the pace of increases is slowing, gaining only 0.7% from three months ago. Asking prices in London shot up 8.4% from a year earlier. It may be noted that the CEBR report published earlier this month stated that the average cost of a London home is expected to be £383,000 this year.
First-time buyers are still struggling to buy homes, with almost half of people purchasing property doing so for at least the third time, the Rightmove report said. In contrast, only 22% of people intending to buy a home in 2013 will be doing so for the first time.
The rise in potential buyers has been caused by the Bank of England’s Funding for Lending Scheme (FLS) which offers lenders cheaper funds on condition that they pass on the lending to households and businesses. This has led to a number of cheaper mortgage products and a rise in the number of deals on offer to potential buyers, including first-time buyers and those with low deposits.
Although most of the best new deals were only made available to borrowers with a deposit of at least 40% when the FLS was introduced in August, as the months have passed there has been an increase in the number of options for other types of borrowers as well.