House prices go through the roof
Written on 28 July 2015
The average cost of a home in England and Wales in June cost a whopping £181,619, according to the Land Registry. That’s 1.1% higher than in May, 5.4% higher than a year ago and passes the previous high of £180,983 in November 2007.
But the picture varied across the regions. The highest annual gains were seen in London where prices rose 9.2% to £481,820. In contrast, Yorkshire and The Humber saw prices rise just 1.4% with the average home now costing £121,070.
June saw prices in some areas fall (Yorkshire and The Humber down 0.9%, the East down 0.8% and the West Midlands down 0.2%) while the North East posted a gain of 3%.
Bad news for first-time buyers
With house prices rising faster than wages, buying a first home is harder than ever. But there are things would-be homeowners can do to improve their chances.
One of the biggest hurdles buyers face is saving up deposit. To get a mortgage you need a deposit of at least 5% of the value of the property. So if you want to buy a home worth £200,000 you’ll need a deposit of at least £10,000. Lenders often reserve their best deals for people with larger deposits so the more you can save the better.
Saving for a deposit
To help first-time buyers save up a deposit, a new Help to Buy ISA is being introduced on 1 December. So far Barclays, Lloyds, Nationwide, NatWest, Santander and Virgin Money have said they will offer these ISAs.
You’ll be able to save up to £200 a month in a Help to Buy ISA and the government then adds another 25% to this up to a maximum of £3,000. To get the maximum bonus you need to save £12,000.
If you’re buying with a partner you can each have your own Help to Buy ISA. The bonus you earn on your savings goes straight to your mortgage lender when you buy a home.
To qualify for a Help to Buy ISA you need to be 16 or over, a first-time buyer and buying a home for less than £250,000 (£450,000 in London).
The cost of buying a home
As well as saving for a deposit, there are several other expenses involved in buying a home. These include:
- Stamp Duty – a government tax on home purchases over £125,001 (in Scotland it's called Land and Buildings Transaction Tax and kicks in at £145,001)
- solicitor fees
- lender’s and mortgage fees
- survey charges
- moving expenses.
You can find out more about buying a home and the costs involved in our organising your finances guide.