Lower house price rise good for UK

Today's release of Nation-wide house prices report showed that average prices rose by 0.4% in July from June, with annual rise of 3.5%.

While for many it might seem much lower since prices were rising much rapidly in 2014. During summer from April 2014, House prices were up an average 11% from a year ago.

However, smaller rise even fall in house prices will do UK good in the longer term.

In 2014 and early this year house prices rose much faster than the actual pay. Pay rise have only started picking up lately. IF house prices keep rising sharply due to lack of supply, affordability will be severely damaged with rate hikes from Bank of England (BOE).

The above chart shows, even with interest rates at record low UK house buyers are failing to enjoy a boom time, due to massive rise in prices.

• Since third quarter of 2013, mortgage payments as a percentage of total take home rose from 53% to 66% as of Q1 2015 for London properties and more than 3 percentage points for overall UK.

As long as property prices drop due to larger supply, there should be less of a concern as buyers remain plenty if price drops.