RISING incomes, stamp duty changes and a supply shortage are putting upward pressure on house prices, new figures show.
The average house price rose 8.3 per cent in February compared to February 2014, according to data released yesterday by mortgage lender Halifax. It marks a slight slowdown in growth from the 8.5 per cent year-on-year increase in prices in January. However, house prices have failed to slow significantly from the boom that peaked at 10.2 per cent annual growth in July last year.
“A fundamental issue affecting the market is the chronic shortage of housing supply, which means many people become priced out. This issue is currently high on the political agenda as we build up to the General Election, with all the main parties pledging to build more homes,” said Jeremy Duncombe, director at the Legal and General mortgage club.
As well as a supply shortage, demand has also been rising. Halifax economist Martin Ellis said demand had been boosted by a rise in “real earnings and spending power, further recent falls in mortgage rates and stamp duty changes”.
Mortgage rates have been plummeting on the back of low base rates at the Bank of England and competition between lenders. In December, stamp duty was changed resulting in a lower tax burden for house purchases under £1m.