It is a topic that is very much at the forefront of many contractors minds – whether you are a home owner or looking to take that fist step on to the property ladder – what will happen to house prices?

There is speculation to suggest that London is in its very own bubble – where the seemingly volatile housing market has had little impact on the property prices in London. But then on the other hand, there are suggestions that the house prices in London are ‘overpriced by 500%’, and there will be a drop in house prices by the end of the year.

There are so many conflicting articles in the press; it is difficult to know what or who to believe. Although most articles do suggest that decreases or increases in house prices have very much become a post code lottery, and location certainly is a key driver in terms of price trends.

Some statistics suggest there was a 5.6% increase in house prices in London for the month of March, whereas the Nationwide House Price index suggests an increase of 2.3% for London over the quarter, and the Lloyds House Price Index claims a 1.08% quarterly change. The good news is that London significantly outperformed the rest of the country over this period, with prices up 17% over the last five years, making London statistically the most expensive region, with the outer Metropolitan region showing the strongest growth.

The demand for property in London is greater than supply, so there will always be competition from prospective buyers, meaning vendors can command higher selling prices. This will naturally have an impact on the overall house prices in the coming years.

With this increasing demand, and the house prices here and in the surrounding areas steadily growing, does this mean that London is in its own right a separate market from the rest of the UK? And with contractor mortgage rates decreasing recently is now not the perfect time to buy?

The Council of Mortgage Lenders (CML) has recorded a 14% decline in gross mortgage lending in April. The estimates fell from £11.4bn in March to £9.8bn in April but much of this can be attributed to seasonal demand changes.

Even the 5% drop in gross mortgage lending, as measured between April last year and this year, cannot be used to determine a trend as we had an unusually high amount of time off this year.
CML chief economist, Bob Pannell, commented:

\”Statistical noise, associated with extended holidays around Easter and the royal wedding, makes it harder to read the immediate market situation. This represents an unfortunate temporary loss of signal, at a time when it would be useful to gauge the resilience of house purchase demand to economic uncertainties and the pressure on household incomes.\”

\”Levels of activity look set to remain broadly flat over the near-term. It now seems unlikely that interest rates will rise much, if at all, this year and this should help keep the market on an even keel.\”

The markets remaining flat can produce levels of stability that are appealing to contractor mortgage borrowers. The markets do look flat but this remains a vague prediction as we wait for May’s lending data.

Author Bio: Article written by Rebbeca Sidwell, Senior Mortgage Consultant at Contractor Mortgages Made EasyTo contact us regarding this article e-mail: media@contractormortgagesuk.com

Category: Finances
Keywords: mortgage, contractor, mortgages, contractors