Latest property price summary: Are prices bubbling over?

publication date: Feb 17, 2014
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

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Do January 2014 property price reports suggest prices are bubbling over?

Latest property price surveys suggest that property price growth is 'getting back to normal' rather than bubbling over.

Although double digit price rises in London are scary after six years of hardly any growth at all and falls of 15-25%, it's as if the media have forgotten prices rose for 10 years prior to the crash - pretty much every year! 

The 'new phrase' for property price growth of a 'bubble' has been coined, and to be honest, is completely inaccurate and misleading. If prices growing were 'bubble like', they would be growing by 20-35% - and we are way off these increases and hopefully we will never go back to them.

So what's actually happening to property prices? READ MY SUMMARY OF ALL THE PROPERTY PRICE REPORTS

To summarise the summary!:-

  • Rightmove say this is the "strongest ever start to the New Year"
  • Hometrack say property price growth is rippling out of London to areas such as Dorset, Essex, Cambridgeshire, Northamptonshire and Devon
  • Nationwide points out first time buyers are now 44% of the market - one of the highest levels ever recorded
  • have figures suggesting the number of properties available to buy are down over 50% from five years ago 

A couple of things to bear in mind though. Help to Buy is being blamed by some for causing prices to rise - this isn't actually true because the volume of sales going through on Help to Buy is tiny compared to other sales, and we are talking about less than 10% of sales. However, what Help to Buy has done is build enough confidence in the market for people to go out and buy homes, so any effect on the market has been 'indirect'.

This is important to be aware of, because if Help to Buy isn't contributing to price increases, it also can't contribute to price decreases, so as a policy, it's still difficult to see how it can cause the 'bubble' it's constantly accused of.

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