House Prices Rose To Five-Year High During October | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 30/10/2020

The economic uncertainty caused by the Coronavirus pandemic has yet to impact the housing market as the latest Nationwide House Price Index reveals that during October house prices rose to their highest level since January 2015.

The average house price now stands at £227,826, up by 5.8% year-on-year and a 0.8% increase since the previous month. While the housing market has remained strong up until now, commenting on the outlook Robert Gardner, chief economist at Nationwide, said: “The outlook remains highly uncertain and will depend heavily on how the pandemic and the measures to contain it evolve as well as the efficacy of policy measures implemented to limit the damage to the wider economy. Behavioural shifts as a result of Covid-19 may provide support for housing market activity, while the stamp duty holiday will continue to provide a near term boost by bringing purchases forward.

“However, activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”

Homeowners looking to improve current properties

According to Nationwide survey carried out in September, 10% of homeowners were in the process of moving home due to the pandemic and a further 18% are considering moving for the same reason. Gardner added: “But many others are looking to improve their property rather than move, with around a third (35%) considering enhancing their home as a result of the pandemic. Nearly half (47%) of those wanted to add or maximise space.

“Interestingly, 41% wanted to improve energy efficiency and reduce their carbon footprint – almost as many as those looking to add or maximise space – which may reflect increased public awareness of the climate crisis. performance certificate) grade C by 2035 ‘where practical, cost-effective and affordable’. It also aims for all fuel poor households, and as many rented homes as possible, to reach the same standard by 2030.

“Over the past ten years energy efficiency has improved significantly as many properties have carried out some energy improvements, such as loft and cavity wall insulation. The latest data (from 2018) shows 34% of the stock is rated C or higher, up from 10% in 2008.

“Nevertheless, this means that two thirds of the total housing stock in England is still rated D or below.”

How to fund home improvements

Homeowners looking to make improvements to their home can choose a number of options to fund their planned renovations. For those coming to the end of their current mortgage term they can look to release equity from their home by remortgaging at a higher loan-to-value (LTV). This is attractive to some homeowners, especially those with a significant amount of equity within their home and with the current low remortgage rates, but homeowners should be aware this will have to repaid over the remaining term of the mortgage which could result in paying more interest in the long term. Before taking this option homeowners should consider speaking to a mortgage broker who will be able to discuss the best options for their personal circumstances.

Another option is to take out a personal loan. At the moment personal loan rates are still competitive, but those who have been furloughed or who have a poor credit score may struggle to get a loan approved and, if they are approved, are unlikely to be offered the most competitive rates.

Alternatively, homeowners can consider a secured loan. Normally, secured loans are for higher amounts of money than personal loan, usually £20,000 or more, and as they have the security against the loan, lenders are more likely to accept applications for those with lower credit scores. Saying this, a secured loan involves the borrower putting their home against the loan as security. This means that if they are unable to keep up with loan repayments their home could be repossessed.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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