The growth in property prices in the UK slowed down

Average prices for residential property in the UK has already exceeded the pre-crisis level of 2007, however, some market indicators suggest that the pace of price growth slowed down.

In June 2014, prices rose by 1% and they are now 11.8% higher than a year ago. However, the sentiment index of price growth from Knight Frank indicates that expectations of rising prices fell slightly.

The average price of a home in Britain rose by £20000 per year, or 11.8% , such index data Nationwide. Thus, the average price of a house in the UK is now £188903, which is above pre-crisis peaks.

However, the growth rate of house prices is different in different regions. So, in London prices rose 26% yoy, while prices in Yorkshire and Humberside increased by 7% over the same period.

The Deputy Governor of the Bank of England sir Jon Cunliffe has expressed concern about too rapid price growth, seeing it as a threat to the UK economy. Real estate prices are rising much faster than earnings of people and this can lead to the formation of large consumer debt that may not be conducive to the stability of the economy.

In this regard, the Bank of England gives lenders more powers by which they can restrict the issuance of mortgage loans, if the total cost of the loan will be greater than 4.5 annual earnings of the borrower.

In addition, already introduced in April of 2014 the stress tests will reveal the financial strength of the borrower is: Can he consistently and painlessly for their family budget to pay the mortgage, if the interest rate of the Bank of England will rise by 3%?

There is a fairly high probability that the Bank of England will raise interest rates before the end of this year. In addition, the rather grim economic news from Europe further push the pound to increase against a basket of other currencies. All of these factors point to the fact that the UK economy will overtake by 2020 France, becoming the second economy in Europe after Germany. Therefore, the UK continues to remain an attractive country for investors around the world, particularly strongly felt in London, where the main flow of investment flows.

® Alice Morgan 15.07.2014 g.

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