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House prices jump in the UK

20th February 2006 | back to article listings BACK    print this article PRINT

Property prices in the UK are on the rise once again, according to new data from online estate agent RightMove.

The firm has announced that the average house price jumped by 2.7 per cent during the first month of 2006, as property price inflation appeared to be showing signs of returning to the levels seen in the early part of the decade. The figures also signalled the first time that the average price of property in the UK surpassed the £200,000 mark, reaching £201,600.

While this does not represent the style of increases seen in the late 1990s and early 2000s, it is positive news for the buy-to-let sector as it highlights the fact that the market is back on track. A slow 2005 had led to worries that there could be a reduction in buy-to-let over the coming 12 months, but that has not materialised and the return to positive growth is likely to encourage many people who considered investing in property as an alternative or supplement to a pension to believe that it is the right option.

"The market's picked up quickly this year," Miles Shipside, Rightmove commercial director, told MyFinances.co.uk.

However, buy-to-let investors looking to capitalise on the increases by adding to their portfolio have been warned that they will need to do so quickly if they are looking to snap up a bargain. Mr Shipside pointed out that properties are now selling "more quickly and stock levels are declining" as a result of renewed optimism and confidence in the buy-to-let sector.

Competitively-priced property is said to be "flying off the shelves" in some parts of the UK as the property sector sees a resurgence. Landlords will be looking to take advantage of the situation and they are ideally placed to make the most of the growth in price inflation.

This is because there was no crash in prices during 2005 – despite what some doom mongers had predicted – so the price of properties has remained relatively high, with only modest declines in the last 12 months. Therefore, many people are still unable to get onto the property ladder, as symbolised by the fact the average house price has now broken through the £200,000 barrier, and are instead looking to rent until they have enough savings to get onto the property ladder or until prices have fallen.

Recent statistics have shown that landlords are beginning to take advantage of the current property market conditions, with 30 per cent admitting that they are currently actively looking to invest in property.

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