January 2016 was an excellent month for the property market in England and Wales, according to the latest figures released by the Land Registry. House prices jumped by 2.5% on average in the period, making it the biggest rise in a single month since June 2002.
London performed particularly well, seeing a 2.8% rise in prices and taking the average for a home to £530,409. In the longer term, this means property values in the capital have grown 13.9% in the year to the end of January.
There are several possible reasons for the rise in house prices at the start of 2016. Some indications point to the continued pressure on supplies as a cause because it means numerous people are still competing for every home. Others consider it a result of investors looking to complete purchases before the new surcharge on stamp duty is introduced in April. Both these reasons will have played a role, but additional factors like low interest rates and competitive mortgage rates are crucial too.
The figures are positive news, but caution is being urged because of potential shocks in the coming months. The Budget announcement in the middle of March is particularly eagerly awaited because it could potentially have an impact on housing supplies and stamp duty. Both of these could cause prices to drop.
The announcement that a referendum will be held in June to decide whether the UK should remain in the EU is also being pointed at as a potential factor that could cause the market to cool. It is expected that this could lead some buyers to delay their plans until after the result is known. The same phenomenon happened in the lead up to the Scottish Referendum in 2014.
Even with these potential stumbling blocks it is believed that prices will remain healthy because supplies are likely to remain limited, interest rates are low and mortgage providers continue to provide finance for buyers. This means if you are looking to buy a house, whether as a home or an investment you still have plenty of opportunities. We can make life even simpler for investors with our professional services, which include portfolio advice, property management and guaranteed rent in Lewisham and throughout the rest of London.