The latest figures from the Office for National Statistics (ONS) have indicated to property specialist Simon Morris that the average UK house price has grown significantly in the year to May 2015.
Residential property recovery
The average UK house price hit a high of £217,000 in May 2008, before falling to a low £187,000 by March 2009. However, the UK’s residential property sector has now recovered, and the average UK house price has since eclipsed its previous peak.
Recent figures from The ONS’ House Price Index indicate that the UK residential property sector is charting a growth trajectory. They suggest that the average house price in the UK grew 8.4% in the year to January 2015, and 7.2% in the 12 months to February 2015, before vaulting up to 9.6% for the year to March 2015.
Average house price grows 5.7%
The UK residential property market recorded a disappointing growth figure of 5.5% in the year to April 2015. However, the Daily Mail has reported that the market has now somewhat recovered, as the ONS’ May 2015 House Price Index indicates that the average UK house price expanded 5.7% in the year to 2015.
This means that the average home in the UK is now worth £274,000; this indicates that £57,000 has been added on to the value of the standard UK home since the market’s previous peak. Furthermore, average residential property values increased 0.9% throughout the UK month-on-month in May 2015, following a fall of 1.4% the previous month.
“Activity is now on the up.”
IHS Global Insight chief economist Howard Archer spoke out on the release of these figures. He said: “We currently expect house prices to rise by six per cent in 2015 and there is an upside risk to this forecast coming from the current lack of properties coming on to the market. We currently see house prices rising by around five per cent in 2016.
“There are increasing signs that housing market activity is now on the up; and we suspect that housing market activity will continue to improve amid generally supportive fundamentals and reduced uncertainty following the decisive general election result.”
Risks of buy-to-let
These figures may convince investors who have recently taken advantage of reforms to remove their pension as a lump sum that now is the time to invest in the buy-to-let market. This can be a lucrative strategy, however it also holds a substantial element of risk.
Property expert Simon Morris would advise any investor who’s thinking of championing this strategy to read his latest guide. It explains the advantages and pitfalls of investing pension funds into the buy-to-let market, to provide investors with the knowledge they need to make an informed decision over whether to opt for this investment strategy.