The average price of a house has soared past the £250,000 mark for the first time. The asking price for a three bedroom semi-detached rose £2,957 in June to £252,798 thanks to stronger consumer confidence and cheaper loans. Homeowners in the South-East saw the values of their properties shoot up by £42,548 (14.8%) to £329,968 since the start of the year. London wins the race with another record of £515,243 for the cost of an average property, continuing its upward path. There are clearly signs of a wider and more sustainable recovery. There is little indication of a North-south divide as the first half asking price surge in the North is almost equal to that of the South. Mortgage availability has increased and the Government’s Funding for Lending scheme has enabled lenders to lower rates significantly. The Help to Buy scheme is also aimed to help support the housing market in coming months and while the economy improves there are hopes that sales will continue to rise and more buyers will flock to the market.
Foreign-owned bank branches in Britain made the country’s financial crisis worse, shrinking their loan books by almost half at the height of the credit crunch. The BoE has shown real concern over the impact of international banking on the UK economy, judging by the bank’s latest research that reveals lending from foreign-owned branches grew in the lead up to the crisis before sinking by 45%between the third quarter of 2007 and the same period in 2009. The study points to the difficulties in kick-starting lending following the slump in credit triggered by the crisis. The Funding for Lending Scheme and Project Merlin, the government’s flagship initiatives to boost lending to Britain’s households and businesses, have been unsuccessful in reversing the decline. It must be noted that involvement in these schemes is limited to UK-owned banks. In fact UK-owned banks restrained their lending far less significantly than foreign branches during the height of the crunch, shrinking their loan books by 14% during the same two-year period.
The pressure on household finances maybe starting to ease, according to Markit’s survey of 1,500 people that illustrates the least negative financial situation for three years. Yet responses show family budgets are suffering with 26% suggesting their finances have deteriorated since June, as opposed to 8% reporting an improvement. Even though the household finance index is still far from ideal, it is the best result since February 2010. Latest figures in a new report by Barclay’s Wealth, show Britain’s wealthiest people are more likely to be entrepreneurs and less likely to have inherited their money than their European and American counterparts. Success at enterprise is the most common way to get rich in Britain as figures reveal 45% of those with over £1m acquired much of their wealth through business profits or sales. Only 14% of rich Britons gained much of their wealth through inheritance compared to 21% of Euros.
Income from employment appeared fragile. It has also been revealed that more earners are finding a second job to boost their wages, in fact three million British people have worked a second job to top up their incomes according to Direct home business insurance research. In total 1.5m people supplement their wages by running their own businesses. Real pay has declined over recent years as fewer people receive pay rises and above target inflation stings.