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UK House Prices Reach Record High This Month

UK House Prices Reach Record High This Month

The average British house price soared to a new peak of £375,131 in May, according to Rightmove.

This marks a 0.8% increase from the previous month, adding £2,807 to the average property price. Despite elevated mortgage rates, the housing market has been invigorated by pent-up demand from prospective buyers who postponed their plans last year.

Driving Factors Behind the Surge

One of the primary factors behind this price record is the heightened activity among home movers. Data from the first four months of the year shows a 17% increase in the number of sales agreed compared to the same period last year. This resurgence is partly due to the seasonal momentum of the spring selling season, which has historically been a strong period for the housing market.

The Challenge of Completion Times

For both buyers and sellers, the time taken to complete a sale remains a significant hurdle. On average, it takes five months from agreeing on a sale to its legal completion, with the entire process from listing to moving taking over seven months. This extended timeline means that prospective sellers aiming to move by Christmas need to list their properties now.

Positive Developments in the Mortgage Market

There have been some positive signs in the mortgage market recently. Major lenders such as HSBC UK, Barclays, and TSB have reduced their mortgage rates, providing some relief to buyers. However, the high demand and slow completion process continue to challenge the market dynamics.

Impact on the Rental Market

The rise in house prices has also affected the rental market. According to Hamptons, tenants renewing existing contracts have seen their rents increase by an average of 8.3% over the past year, outpacing the rental growth for newly let properties, which stood at 6.4%. This trend is due to the significant gap between current market rates and what existing tenants are paying, discouraging them from moving unless absolutely necessary.

Enter Bridging Finance

For bridging lenders, these trends highlight both challenges and opportunities. The rising house prices and increased demand indicate a robust market where quick access to funds can be crucial for buyers looking to secure a property. Bridging loans, known for their speed and flexibility, can be an attractive option for those needing to bridge the gap between buying and selling or completing renovations.

Moreover, the reduction in mortgage rates by major lenders could stimulate further activity in the market, leading to increased demand for short-term finance solutions. Bridging lenders can play a pivotal role in supporting buyers and investors who need fast access to capital.

In summary, the UK housing market is booming. Despite high mortgage rates and lengthy completion times, pent-up demand is driving increased activity. Recent mortgage rate cuts by major lenders, may further stimulate the market. However, challenges remain, particularly in the rental sector where significant rent increases are impacting affordability. Overall, the market presents both opportunities and challenges for buyers and renters.


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