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Average UK House Prices Surpass £250,000 for the First Time

Average UK House Prices Surpass £250000 for the First Time

Following several months of continuous growth, the average market value for a home in the UK has passed a quarter of a million pounds for the first time. The latest figures from Nationwide indicate average growth of 9.9% since this time last year, resulting in an average house price of £250,311 for October.

This is the highest average figure ever recorded for property prices in the UK, spurred by record demand in the wake of COVID-19 restrictions. Compared to the previous month, average house prices were up 0.7% in October, indicating a gradual slowdown.

But for the foreseeable future at least, most analysts and estate agents see nothing but further growth for UK house prices. Albeit, at a slower rate than during the first three quarters of the year.

“The dynamics of the housing market may be about to shift slowly once again, but make no mistake, the boom still isn’t over,” commented Fine & Country managing director, Nicky Stevenson.

Unprecedented Demand

A significant shift in buyer preferences triggered a huge spike in demand for properties outside the usual urban centres over the course of the past 18 months.  Competition for spacious properties with private outdoor spaces has been ferocious, leading to major inventory shortages and sky-high property prices.

The temporary stamp duty holiday also had a significant impact on the sector during the first half of the year, both among first-time buyers and movers alike.

With the stamp duty holiday having been withdrawn and mortgage rates on the up, the general consensus points to a slowdown in monthly house price growth going forwards. Though it is unlikely the average market value of a UK home will go anywhere but up over the next 12 months at least.

“We expect house prices to continue to beat expectations in the near term before a gradual rise in mortgage rates applies the brakes in the second half of 2022,” said Andrew Wishart, property economist at Capital Economics.

On-going Uncertainty

Chief economist at Nationwide, Robert Gardner, said that while uncertainty remains the norm, there is no reason to believe property price growth will do anything but continue to climb.

“The outlook remains extremely uncertain,” he said.

“If the labour market remains resilient, conditions may stay fairly buoyant in the coming months – especially as the market continues to have momentum and there is scope for ongoing shifts in housing preferences.”

Mr Gardner’s comments reflect the latest projections published by the Office for Budget Responsibility which is the government’s official forecaster who has predicted further house price growth for the next few years.

Specifically, growth of around 3.2% is expected in 2022, followed by much more gradual growth of 0.9% in 2023.

While raising property prices are playing into the hands and pockets of homeowners, more first-time buyers than ever before are finding themselves priced entirely out of contention.

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