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UK House Price Inflation
As we wrap up the first month of 2021, we can confirm the market continues to strengthen. Figures show a 4.3% increase in the UK house price growth rate. The momentum in the growth of house prices is mostly being driven by Northern England, Wales and Scotland. Demand for housing continues to rise in these regions, due to the affordability of homes. The table below includes figures from Zoopla’s UK House Price Index. Indicating the average UK house price is now £223,700.
*Figures from Zoopla UK House Price Index
Northern Regions Record Highest Growth Rate in Decade
House price growth across the Northern regions. Including North East, North West and Yorkshire and the Humber. Growth rates in the North West region rose by 5.4%. Notably, the rate of increase is the highest since the global financial crisis. The core cities of the Northern Powerhouse, record the highest increase in price growth. Particularly within the major cities of Liverpool and Manchester.
The Northern regions have seen a rise in business activity and regeneration investments over the years. Large and influential companies such as the BBC, Channel 4, KPMG, and Burberry are slowly positioning offices spaces and headquarters here. Joining the likes of Asda, Morrisons, Adidas and the NHS who already have UK headquarters here. As the North attracts more business opportunities, it has had a positive impact on the property sector.
Liverpool is a gateway to the Northern Powerhouse. The Atlantic-facing city boasts investment opportunities across the city. The city has the lowest property prices in the country. Therefore, projecting extremely high rental yields. In comparison to 2019, Liverpool records a 6.3% rise in house price growth. This is the highest annual growth rate in 15 years!
Home to many large businesses, iconic football clubs and a globally recognised food and drinks scene. Manchester is a city that is renowned across the world. The city records an annual price inflation of 6% in comparison to last year. A prime investment location, with a record of 117% rise in people moving into the city in 2019, in comparison to 2018.
Housing Demand Continues to Climb
Demand for homes is much higher than this time last year, despite the lockdown. Levels continue to soar above average. Ultimately, there is no indication the restrictions will lift any time soon. This is a leading factor for the rise of home movers as people continue to re-evaluate living spaces. Figures show demand for housing increasing by 13% in comparison to 2020. The number of new sales agreed has also risen by 8%.
With only two months left of the stamp duty holiday, buyers are still rushing to complete transactions. Due to the sheer volume of mortgage approvals and sales agreed, the business pipeline is inundated – therefore, making it difficult to complete transactions.
Number of New Listings Decline
The chart below shows a reduction in levels of new supply. On average, the flow of new supply to the market is down by 12%. However, London is the only region reporting an increase in new listings. Many of these include flats. This is due to homeowners transitioning from flats to houses, in the search for a larger working space.
Outside of London, there is a lack of new listings across the UK, combined with a rise in demand. As a result, this will further increase house prices. In conjunction with the shortage of listings, there is an increase in the number of sales agreed. Therefore, reducing the availability of home for sale by 6%. Thus, limiting the choice available for buyers.
In the second half of 2020, the sector sold an additional 47% of homes in comparison to 2019. Usually, on average it would take 90-days to complete a sale. However, after analysing market evidence, reports indicate a two-week delay. On average it now takes 110-115 days to complete a sale. This is due to the influx in the market. Following the effects of the pandemic, the Brexit deal and the supply and demand imbalance.
Richard Donnell, Director of Research and Insight at Zoopla stated:
“Rising demand and a lack of new homes coming to the market for sale will keep an upward pressure on house prices in the near term, especially in the more affordable parts of the UK.”
Secure Your Next Investment
The supply and demand imbalance is resulting in inflated house prices. Although house prices have rocketed in most cities, particularly in the North – many remain at a price point which is below the UK average.
Therefore, providing affordable investment opportunities. If you would like to discuss your next investment or want to talk through your requirements. Drop us an email today.
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