Monday, 16 December 2019

Report shows significant increase in prime market

Report shows significant increase in prime market

THE number of prime residential housing transactions has increased considerably over the past 20 years, according to a new market analysis by independent mortgage broker Private Finance.

In 1999 there were 1,254 transactions for residential properties valued at £1million and above, and by 2018 this had increased to 15,445 — an increase of 1,231 per cent.

However, if you adjust for inflation, the increase is less dramatic.

A million pounds in 2018 is the equivalent of £587,414 in 1999 — according to the Bank of England’s inflation calculator — and there were 5,162 residential property transactions of £587,414 or more in 1999 compared to 15,445 valued at £1million and above in 2018.

This equates to an inflation-adjusted increase of 299 per cent, which is still significant. By contrast, the annual volume of all residential housing transactions across England and Wales fell from 1,194,025 in 1999 to 868,886 in 2018 — a 27 per cent fall in volume.

The increase in high-value property transactions is a sign of house prices having risen significantly faster than inflation over this period of time.

According to the report by Private Finance, the average UK house price was just £80,443 in 1999, compared to £232,710 in 2019. However, the report points out that while the property market has become more expensive over the past 20 years, average mortgage rates have become far more affordable.

Simon Checkley, managing director of Private Finance, said: “In the 20 years since Private Finance was founded, the housing market has undergone a radical transformation, with average house prices in particular almost unrecognisable.

“Transactions of houses in higher price brackets have soared in accordance with rising prices, creating a much bigger and more complex prime market.

“Though activity in the housing market this year has been subdued, the prime market remains supported by years of consistent growth.

“Less activity is to be expected given the ongoing political and economic uncertainty affecting the country, which has impacted the number of prime transactions in the capital in particular.

“However, once Brexit has reached its conclusion, we anticipate a rush of pent-up demand as the spectre of uncertainty is at least somewhat removed.

“Recent price falls will make UK prime property an attractive prospect for overseas buyers, and domestic buyers will be looking to get their property plans back on track.”


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