Soaring House Prices ‘Continue to Challenge Normality’

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According to the Office for National Statistics (ONS), house prices have increase again in the last 12 months from January 2021, to January 2022.

Residential property prices have saw an increase of 9.6% in year to January which now means that the average price of homes now stands at £274,000. This is £24,000 higher than the corresponding period last year.

Not only this, but house price inflation remains at high levels despite the cost-of-living crisis and mortgage rates increasing.

The managing director of real estate at Shawbrook Bank commented: “House prices continue to challenge any sense of normality despite rising inflation and the soaring cost of living forcing a reality check to buyers’ budgets. Record prices and undiminished demand is putting the pressure on buyers that aren’t seeing their money go as far across the board.

“Yet, the outlook does remain positive for those looking to sell. The market remains firmly in favour of those with capital available and looking to add to portfolios or let out properties.”

The greatest rise in property prices in the last 12 months was seen in Wales where the average cost of a home has risen by 13.9%, resulting in the average price standing at £206,000.

As expected, London continues to be the region with the lowest annual growth at 2.2%.

Nicky Stevenson who is the managing director at a national estate agency said: “A modest tightening in house price growth has been expected for some time with challenges building across the broader economy.

“Affordability has been stretched by a spike in inflation and the consequential upward pressure on interest rates.

“While the effect of escalating tensions across Europe remains uncertain, energy market volatility may continue to erode household budgets in the months ahead.

“However, the effect of this on house price growth will continue to be mitigated by supply issues with too many buyers chasing too few homes, and not nearly enough new listings to satisfy current demand.”

House prices and demand from buyers have jumped significantly, driven by high levels of appetite for moving home, according to Nick Leeming, chairman at Jackson-Stops, who says this is something his firm is seeing across many of its branches.

He commented: “Homeowners looking at their next move are pressing forward and across Jackson-Stops branches new instructions in January were 14% higher than the same month last year.

“With prospective buyers now often ready to transact quickly with their own home prepared for sale and finance arranged upfront, selling property in the first half of this year should ensure that vendors are well-placed to capitalise on a still buoyant market.

“Of course, concerns around higher costs of living and rising interest rates may serve to modify price rises over coming months, but the market has continued to defy expectations over the last two years, and it remains to be seen whether any significant readjustment will take place.”

As well as house prices increasing, private rental prices paid by tenants in the UK has increased by 2.3% in the 12 months to February 2022. In fact, this was the sharpest annual increase since December 2016.

The figures from ONS also indicate that housing affordability worsened during the pandemic, with house prices hitting an all-time high. It has been revealed that in England last year, full-time employees could typically expect to spend around 9.1 times their workplace-based annual earning on buying a home, compared with 7.9 times their earnings in 2020.

Ceri Lewis, ONS house prices statistician mentioned: “We are continuing to see strong annual growth in house prices across the UK, with the biggest rises seen in Wales, while London continues to be relatively sluggish. UK rental prices also continue to rise at a rapid pace, with their highest annual growth in over five years. Once again, we are seeing price climbs across the board with all nations and regions seeing increases.”

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