The UK housing market continues its upward trajectory, with house prices rising for a fifth straight month, reaching a record high of £298,083. Halifax reports a 1.3% monthly increase in November, the most significant gain this year, and an annual growth rate of 4.8%, the strongest since late 2022.
Despite this growth, the Bank of England has cautioned that 4.4 million households could face higher mortgage payments in the next three years. Approximately 420,000 households are projected to see an increase of £500 per month, while many others will face their second rate hike since 2021.
Karen Noye from Quilter attributes the recent surge in house prices to falling mortgage rates and improved stability, which have revived buyer activity. She noted that while the market shows resilience, high borrowing costs and deposit demands continue to challenge affordability, especially for first-time buyers.
How Much Can You Borrow?
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Analysts anticipate further price increases leading up to April 2024, as the current stamp duty relief expires. The impending change has spurred a rush among buyers, particularly first-time buyers racing to complete purchases before the tax thresholds revert.
Jonathan Hopper of Garrington Property Finders observed that this urgency is driving up offers and activity, potentially leading to another “Stamp Duty stampede.” However, the post-April market could slow as buyers opt for lower-priced homes or negotiate more aggressively.
Alice Haine from Bestinvest emphasized the affordability squeeze caused by rising taxes, inflation, and living costs, which continue to strain household budgets despite government pledges to address housing challenges and improve living standards.
Understanding how much you can borrow is the first step in setting realistic property goals, so make sure to check your borrowing capacity before house hunting.