Property Market Rise but so is Household Debt
UK Property Market
Across the UK house prices are slowly starting to rise, with average increasing by 8.4% in the in 12 months up to last August. The main contribution is mainly from England where the increase is 9.2%. But what is noticeable is that the regions which backed Brexit most strongly have seen the strongest house price growth.
For Northern Ireland the continuing effort to return to the ‘glory days’ has been a rockier road, with a momentous climb to ever get to the prices of pre 2007. Northern Ireland experienced a huge house price bubble in the years leading up to 2007 before the market crashed. Prices more than halved between 2007 and early 2013 but have been increasing gradually since then. Now with an increase of 6% over 2015-2016 Northern Ireland Housing Executive said there has been stability for more than 2 years now even though with warnings of ‘real tests’ in 2017.
All positive news for the Property Market. However, household debt across Britain and Northern Ireland rose sharply last year, with more families having to borrow to supplement their pay, a study reveals. And that means the average household now owes a record amount of £12,887, even before mortgages are taken into account.
It is researched that the majority of borrowers will be able to cope with this extra debt. However, if the economy does indeed suffer in 2017, this borrowing could become more difficult to repay, and some households risk finding themselves exposed to sudden changes in financial circumstances.
So in comparison, as house prices increase, those families living in them are likely struggling with their personal finance. The uncertainty that will arise over the next few years because of Brexit will undoubtedly impact on these matters, but it is much too early to estimate the size of this impact at this stage.
Through no fault of their own, the biggest impact will hit first time buyers. Interests rates are likely to rise and with wages not moving in line with price hikes, it is evident that there is a serious debt bomb waiting to tick.
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