The latest figures from Land Registry show that house prices in England and Wales grew by an average of 1.7% in 2012.
This represented their fastest rate of growth in two years.
Much of this growth was driven by property values in London, highlighting the continued regional divide in property prices.
We often explain to clients that there isn’t a property market, but instead there are property markets.
In December, average house prices were up by 0.8% in the month. As a result, average house prices in England and Wales ended the year at £162,080.
These figures from Land Registry are at odds with the numbers reported by Halifax, showing a 0.3% fall in house prices during 2012.
Nationwide estimated an even larger fall at 1% for the year.
Because the Land Registry figures are based on actual property transactions, they should be more accurate than the Halifax or Nationwide surveys which are based on their own levels of mortgage approvals.
House prices are important for Financial Planning for a couple of reasons.
When prices are on the up, consumers tend to feel more confident in their level of their wealth, which results in spending and greater economic activity.
Whilst it is dangerous to fuel economic growth with house price inflation alone, this can certainly contribute towards the ‘feel good’ factor needed for economic prosperity.
Rising house prices also helps to improve the net wealth of individuals, reducing the proportion of their property wealth which is mortgage debt and putting them in a stronger financial position for the future.
The downside of higher house prices is of course the difficulty this causes for first-time buyers.
As the population continues to age, we expect to see more parents and grandparents downsizing to release equity from their homes in order to fund retirement, the cost of care fees in later life and provide an early inheritance to future generations, giving them a helping hand onto the property ladder.
All of this requires careful planning.
Do speak to us about the creation of a comprehensive Financial Plan if you are considering using the wealth in your home to fund future goals.
Photo credit: Flickr/Images_Of_Money
