House prices rocket as number of houses for sale falls

Average house prices in the United Kingdom have exceeded £200,000 for the first time rising 1.7% in just a month.

Experts say the lack of homes for sale means prices will keep going up leaving it almost impossible to get on to the property ladder.

The number of homes for sale in the UK fell to its lowest for 37 years in June which has sent house prices rising a staggering 1.7% in just a month. Fears are now growing that house prices are reaching levels so high they will become un-affordable. The average UK house price is now £200,000.

Martin Ellis, housing economist at Halifax said “This shortage has been a key factor maintaining house price growth at a robust pace so far in 2015. Economic growth, higher employment, increasing real earnings growth and very low mortgage rates are all supporting housing demand, with signs of a recent modest pick-up in demand.”

“Absolutely, for the time, the cost has moved so high that it gives a small backdrop to the UK house buying habits. We have a country where all wanting to buy or own property that too under some social pressures. Interest rate in this country is all time lows that means banks can therefore lend mortgages. And whether you are creating the money yourself or buying in the money market, either of the ways, money is cheap and lenders aren’t very keen to lend”, Ivor Kellock, Finance & Wealth Management Expert told Press TV.

There are several factors around the drop in the number of homes on the market. Homes in more affluent areas have higher costs of stamp duty and other costs meaning many favor the cheaper option of renovation and building extensions.  In addition many that would want to move homes are fearful they will not be able to find an affordable home suited to them and decide against selling.

Following the general election analysts felt house prices would stabilize as political uncertainty in the country was now removed, but this has not been the case. With the cuts to housing benefits announced by the Chancellor George Osborne it means more people will be forced out of the private rented sector and in to social housing, which is extremely problematic with councils and local housing associations already struggling.

"The fact that we have got rise in house prices over the last couple of years, it is certainly going to affect the lower middle class people. House price is being pushed so high and depending on your job prospect, it will be more difficult for you to go out and buy”, Kellock concluded.    

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