House Price Growth Continues to Defy Widespread Economic Turbulence
The after-effects of the COVID-19 pandemic are expected to linger for some time. During which, economic uncertainty will continue to be the norm for much of the United Kingdom.
Why are average house prices soaring in most regions across the UK? With the pandemic still maintaining its grip on much of the nation, how has the average UK house price hit a new all-time record-high?
A Surprisingly Buoyant Real Estate Sector
The Nationwide building society recently described the real estate sector in the UK as buoyant, having surpassed even its own most optimistic projections. Property owners are watching the market values of their homes skyrocket like never before, as first-time buyers continued to find themselves priced entirely out of the market.
For the first time in history, the average price of a UK home recently exceeded £256,000.
House prices for March were up around 10.2% compared to the same time last year. This is the fastest annual growth rate recorded in 14 years, which is remarkable given the events of the past 12 months.
Meanwhile, data published by Zoopla suggests that the fastest house price increases are occurring away from London and the South East of England. Central regions of the UK and Wales are seeing record demand for desirable properties, resulting in major house price increases where inventory is available.
According to Nationwide, much of this is attributed to the ongoing ‘race for space’ among movers and first-time buyers alike. More people are prioritising spacious homes with room to work and private outdoor spaces than ever before, rather than setting their sights on urban apartments and homes with convenient travel connections.
Unfortunately, such properties are already in dangerously short supply.
The Countdown to the Stamp Duty Holiday Deadline
In addition, the huge spike in property prices in March has been attributed in part to the previous deadline of the stamp duty holiday. Driven by the prospect of saving up to £15,000, prospective buyers sought to rush through their property purchases before the temporary suspension expired.
The deadline was subsequently extended to the summer, which is likely to continue driving interest for the next couple of months at least.
It is the scarceness of affordable homes on the market that is driving prices higher; this has resulted in unprecedented scenes outside several UK estate agents, where people queued in freezing temperatures overnight to secure affordable properties they had not even viewed.
Low interest rates and the reintroduction of the 95% LTC mortgage are also motivating movers and buyers to take action. Even in the face of economic uncertainty, low-deposit mortgages coupled with increasingly scarce inventory are proving enough to nudge prospective buyers off the fence.
Whether the market is able to maintain its momentum post-lockdown remains to be seen – particularly with the governments planned easing of lockdown measures already in jeopardy.