How will inflation affect the house price index?

Inflation is difficult to predict but Enable’s IFA’s in Bishop’s Stortford know it is important to keep it in sight for any financial planning. Former RICS residential chairman and London estate agent Jeremy Leaf, has recently said that in his opinion inflation has taken over from Brexit as “the biggest threat to affordability and confidence in the housing market.” His statement comes after the announcement that inflation had leapt to 1.6 per cent, the highest for 18 months in a bigger rise than had been expected. “If the cost of everything is going up, people feel poorer and less inclined to take on further debt. With the housing market it always comes down to confidence and if people see bad news, they tend to overreact, sit on their hands and do nothing” warns Leaf.

The comments were made soon after the Office for National Statistics released its figures for house price rises in the year to November suggesting that they have risen by an average of 6.7 per cent in the year to November, across the UK, which was up from 6.4 per cent a month earlier. Making the average UK house price £218,000 in November 2016 some £14,000 higher than in November 2015 and £2,000 higher than October. As is usual the biggest rises were seen in England, where prices increased 7.2 per cent in the 12 months to the end of November making the England average price is £234,000.  Leaf says, “the house price index findings are not too surprising because ... they are a little bit historic. We expect to see some moderation in price growth in future as we have already seen on the ground in the past month or so. Shortage of stock and increased nervousness is showing itself in only slightly higher prices and lower activity.” If you are trying to make plans for housing we are always happy to talk you through your options and Enable in Bishops Stortford.

https://www.estateagenttoday.co.uk/breaking-news/2017/1/inflation-bigger-problem-for-housing-market-than-brexit-claims-top-agent

Issued by: Enable Independent Financial Life Planners • 
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