Posh period property money pits: Nationwide House Price Index

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, comments on the publication of the Nationwide House Price Index, showing posh period property money pits.

Key points from publication:

• • People living in the most energy efficient properties (rated A-C) pay an average of £1,700 in energy bills and those in the least efficient (rated F-G) pay £3,900.
  • After the hike in October, energy bills for the average property (rated D) will rise by £1,250 (even after the £400 discount). Those rated A-C face a £1,000 rise, those rated E will rise £1,700 and those F-G £2,700.
  • The average rate on a two-year fixed rate mortgage is over 2 percentage points higher than it was two years ago, and the average rate on a five-year mortgage is 1.5 percentage points higher than five years ago.
  • House prices are up £50,000 in two years. Annual price growth has slowed to 10% – but prices are still up 0.8% in a month (seasonally adjusted).

Sarah Coles said:

“You might think a posh period property is your dream home, but in reality, owning one is becoming a financial nightmare.

“The age of a property is the single biggest factor in determining how energy efficient it’s likely to be. Almost all homes built since 2012 in England and Wales have a high energy efficiency rating – compared with 12% of those built before 1900 in England and 8% of those of the same age in Wales. The next most important factor is size. Flats and maisonettes are most likely to be in the most efficient bands and detached homes are the least likely to be. It means that big, detached Victorian homes are costing people dear.

“Before the horrendous hikes in the energy price cap, this might have been manageable, but the impact of rising prices is taking a terrible toll. The average energy bill for the least efficient homes is twice the level of the most efficient homes – at £3,900, and the price cap rise will add an incredible £2,700. That’s an impossible bill £550 a month.

“And it’s not just the energy bills that make these properties a financial liability. Because so many people want to buy a period property, you’ll pay a premium for them compared to something less desirable that’s 20-40 years old. The price of houses is still growing faster than the price of flats too, so a big, older property is going to mean enormous monthly payments. 

“Anyone who has been in their home for a while, meanwhile, and is coming to the end of a fixed rate mortgage deal is in for a mortgage shock, because the rates are now significantly higher than when these two-year and five-year deals were locked in. It means trying to wrestle with hefty monthly mortgage payments while trapped under the weight of bloated energy bills.

“For older people, who are still in the family home, the pressure of energy bills may make it impossible to stay. Anyone on a fixed retirement income faces a challenge when prices rise, and for many people these higher energy bills will be insurmountable. This spike in energy prices may force them to leave behind a home they love because they can’t afford to stay.”

Kindly shared by Hargreaves Lansdown

Main article photo courtesy of Pixabay