Halifax reports that over the past decade property value in the UK has increased at a much higher pace than the inheritance tax threshold. "That has led to a sharp rise in the number of homes valued above the threshold. Now, the average detached house in the UK is valued above the inheritance threshold of £300,000,” says Tim Crawford, group economist at Halifax. It is estimated that the number of the owner-occupied properties in the UK valued over £300,000 (the 2007/08 IHT threshold) that is presently over 2.3 million. While IHT threshold line is falling far behind, the house price growth is progressively fast and steady.
In a related, but more intricate research Halifax Estate Agents discovered that house location and the type of property are two main factors that determine property price increase. The price increase for terraced houses clearly dominates the race. In the last ten years equity value of this type of property has more than doubled. Flats and maisonettes are 4% behind. Over the past decade equity value of an average terraced house shot up by 239%, and by 235% for an average flat or maisonette. Over a shorter, but more recent span of the last five years, semi-detached houses gained popularity, and overtook the second place as the most profitable property investment; its value increase calculated 95%. This phenomenon can be explained by the relationship between the current value of the property, and the overall national growth of property value. As the gap between the value of the least and the most expensive property type promptly wanes, the more inexpensive property types rapidly increase in price. "Terraced properties have seen the largest average house price increases in both the last five and ten years. Although the average price of a terraced house is still below the UK all property average, the gap has narrowed,” comments Tim Crawford. The data collected by Halifax suggests that in the foreseeable future the property prices for the terraced houses will continue to increase at the highest rate among all property types due to their better than average house price growth.
The report also shows that seven out of ten top locations for house price growth are located in Northern Ireland. Over the last ten years the price on an average terraced house in Northern Ireland has increased by 372%. During the last year alone, property prices in Antrim and Newry rose by 46 percent. Comparably, the property value of terraced houses in Greater London has increased by 271% over the last ten years. Halifax calculated that in order to keep up with house price growth IHT threshold must be raised to £460,000. The government will not be executing this step in the immediate future.
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