UK House Prices Boom: Strongest Growth Since 2006

UK Property Market showing

Staggering Growth

The UK house market is experiencing staggering growth during a particularly turbulent period. Once again, predictions for the property market have been blown out of the water as house prices continue to rise in the face of adversity.

The house price index showed the average UK property price reached a record high of £272,992 in November. Consequently, the annual rate of inflation was tipped up to 8.2%.

This makes November the fifth year in a row that house prices have risen. Typically, values have been up by almost £13,000 since June, and more than £20,000 since this time last year.

To put this into perspective, since the first lockdown was announced back in March 2020, house prices have risen by £33,816, which equates to £1,691 per month.

£272,992
UK Av. Property Price
8.2%.
Annual Inflation Rate
+£20,000
Since Last Year

Why are house prices rising?

Pent up demand following lockdown
The race for space and changing buyer preferences
Stamp duty holiday
Low mortgage interest rates

This rise in house prices is a result of several factors. Firstly, the pent-up demand following lockdown was a huge influence on the spike over the summer. This was partly due to the standstill of the market during lockdown, but also as a result of the race for space. Buyers began to revaluate their living situations. In particular, many buyers began to search for properties with more indoor and outdoor space to cater to their new work-from-home lifestyle.

Alongside this, the stamp duty tax break gave buyers the opportunity to save up to £15,000 on their property purchases. Unsurprisingly, this appeared to turbo-charge the market. In particular, towards the deadline of October 2021, buyers rushed to take advantage of the savings.

Furthermore, mortgage interest rates remain at an all-time low. Since March 2020, the Bank of England base rate has remained at 0.1%. Additionally, while the market remains competitive, lenders have been “keen to lend”. This means even borrowers with a low deposit threshold are able to secure extremely competitive deals. Coupled with strong employment and wage growth as the economy bounces back, it seems now is a very good time to secure a mortgage.

Property investors can achieve

Higher returns

Property prices are continuing to rise, therefore, making it a profitable market for investors. The continued rise of house prices means property investors are seeing huge returns on their purchases. Therefore, if you are looking to expand your property portfolio or step onto the property ladder, now is a perfect time.

In particular, property markets in the North-West, Yorkshire and the Humber, and the Midlands seem to be performing exceptionally well. This is fantastic news for investors, as the property markets are much more affordable than those in the South. Therefore, property investors can achieve much higher returns.

In terms of investment from overseas, the UK housing market has historically been a popular choice. This will continue to be the case, as new data based on HM Land Registry statistics show that foreign ownership of UK property has gone up by around 180% in 11 years. So long as housing stock falls short of demand, the property market will continue to be attractive.

CityRise Verdict

It is particularly interesting that house prices have risen so drastically in November. Many property experts predicted a drop in prices following the end of the stamp duty holiday. That said, the heightened number of people wanting to buy a house quickly outweighed the number of available houses – increasing the average price.

Looking ahead, we expect this trend to continue. House prices will continue to rise as they are underpinned by a shortage of available properties. Despite several large-scale investments being put forward to tackle the chronic housing shortage, such as the £8.6bn affordable homes scheme, supply is still struggling to keep up with demand. Therefore, investors can be sure that if they purchase a property now it will inevitably increase in price.

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