UK House Prices Top £200k

The average cost of a home in the UK is fast approaching £200,000 taking it above the threshold for inheritance tax, according to the outcome of a survey released today.

The survey, conducted by Halifax mortgage lenders, reflected the average price of a home in the UK to be of £199,770 - just £330 off the symbolic £200,000 mark.

The survey has increased the rate of annual price inflation to 11.4% from 11.2%, despite the fact that the Bank of England has raised interest rates five times over the last year.

However, it is thought that by the end of this year the rise will have slowed down as the impact of the successive rises begins to take its toll. Additionally, with credit markets tightening there is unlikely to be any fall in the interim period, despite the likelihood that inflation will fall over the remainder of the year.

One of the major problems of such significant house price inflation lies in inheritance tax liability. In order to qualify for inheritance tax, an estate must be valued at only £175,000. Originally designed to catch only the richest in society, inheritance tax now looks likely to catch the majority of the population, in what can be a costly and traumatizing tax to bear on the death of a loved one.

Price inflation is thought to be driven largely by a lack of supply of affordable housing nationwide, as well as falling unemployment and overall economic strength in the UK.

Additionally, with lenders less willing to stump up capital for consumer mortgages in the current credit climate, prices will continue to increase until the sub-prime situation begins to have an effect on the UK economy.

However, in another survey conducted by DCLG, a government department, reflected average prices to already have broken the £200k mark, at around £214,222, suggesting that we may already be ahead of our price inflation figures.

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