House prices likely to soar

The value of property in the UK will soar over the coming months, according to leading economists.

House prices rose modestly in April but are expected to rise rapidly now that the uncertainty that led up to May’s General Election is at an end. In fact, the Conservative win has galvanized sellers and buyers of property alike.

By April of this year, average house prices had risen to just £1,200 below their highest peak reached just before the financial crisis in 2007. Figures released by the Land Registry show that house prices increased by 0.9 per cent in April, having fallen by 0.8 per cent in the previous month.

Property economist, Matthew Pointon, of City consultancy Capital Economics, said that he expects further rises in house values this year because the stock of properties for sale is at an historic low.

Annual house inflation is the lowest it has been for 14 months at 5.7 per cent but, Matthew Pointon believes that it is has reached its low point and is set to rise.

Rising incomes, as well as competition between mortgage lenders to attract customers with the best deals, are likely to increase the supply of homes on the housing market and to push up values.

In the run up to the general election, the number of properties at the top end of the housing market fell by as much as 30 per cent, as homeowners worried that a Labour win would see the introduction of a mansion tax on properties worth more than £2 million. Since the Conservative win, buyers of luxury homes have been returning to the market.

Surging house prices are likely to pose a dilemma for the Bank of England who may choose to avoid another housing boom by raising base rates earlier than otherwise predicted.