House prices in the UK are rising at the fastest rate in the last 18 years since last month – says independent estate agents in Buckingham and leading market researchers.
According to one of the biggest mortgage lenders in the UK, the market is not showing any signs of slowing down any time soon. The rise in prices has hit a record high since 2004. At present, any typical property costs £294,845 which is another record high since the prices are continuing to rise each month over the last year, and the climb has been by 6.8% or £18,849 if converted in cash.
One of the biggest reasons for this imbalance in supply-demand is the reason that is driving the prices up. With the demand being strong and the stock availability of properties for sale, the sale still remains to be low.
It appears that the price of properties has been guarded due to squeezing in the cost of living. This is mainly because the rise in the cost of living is affecting the people belonging to lower-income groups and they are typically much less involved and active in the process of buying and selling any property. On the other hand, people belonging to a higher income group have been able to save funds during the pandemic.
While the housing market will not remain immune to the economic slowdown, as of now, the rise in prices is being supported by the big shift in the demand that has been taking place towards bigger and more spacious properties. The average prices for such detached houses are rising by almost twice the rate of apartments in the past year, which is 13.9% in comparison to 7.6%.
However, with time, the continued pressure on the budget of households due to inflation and the high rate of interest rate will weigh down more heavily on the real estate market. And this, in turn, will have an impact on affordability. As per market studies and expert opinion, the price-to-income ratio has reached a record high.
Hence, although the slowing down in the growth of prices will be significantly affecting the growth in the months lying ahead. As per bank officials, the central bank is preparing to do anything that would prevent the cost of living to skyrocket and for the rise in the cost of living from becoming a lasting problem. This could possibly mean rate hikes, and the Central Bank has increased the rate of interest five times since last December to 1.25%.
A typical Scottish home is now costing an average price of £201,549, leading to a historic breakthrough of £200,000 for the very first time in history and has been up to 9.9% on June last year.
London is continuing to stay beyond in comparison to other regions with its annual price gains of 7.1%, although the average property price is £547,031 being the most expensive place to live in the UK and become a homeowner.
Since August, UK prices are continuing to rise but there are indices that show a different direction of travel. The nationwide report says that the strongest growth in house prices has been in Wales which is at 11.1%.
A difference can be observed in the direction in which house prices are going. The price index provided by Nationwide shows an average UK house’s price will rise by 11% in July 2022. And the annual rate of growth in the prices has been at 10.7%.
Resilience in the market:
Although there has been an increase in prices due to inflation and the rate of interest continues to rise. Even though the demand for homes has somewhat slowed as the year progressed, it is still 25% above the average rate recorded in the past five years, and it is also at par with the figure recorded at this time in 2001.
In a nutshell:
The pandemic has impacted all sectors of the world negatively, and the real estate market was no different. While market experts expected a surge in the prices in the market, the expectation in the house prices has surpassed the expected number with not much intention of slowing down in the upcoming months.