House prices keep hitting record levels as the UK property market maintains its strength. A slowdown has still yet to materialise, but is that expected to change?
Between February and March, monthly house price growth increased at a rate of 1.4%, or £3,860 in cash terms, which is the biggest rise in six months. This is also the ninth consecutive month house prices reached another record high, according to the latest Halifax House Price Index.
After recent growth, the average house price now sits at a record high of £282,753. This is an 11% increase year-on-year as growth continues to track around its highest level of inflation since mid-2007.
Additionally, the new average house price is up by a hefty £28,113 to the average recorded one year ago. Interestingly, this is not far off of the average UK earnings across the same period.
Russell Galley, managing director of Halifax, comments: “The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on households’ finances.
“Although there is some recent evidence of more homes coming onto the market, the fundamental issue remains that too many buyers are chasing too few properties.”
Two years on from the first national lockdown
Since the first COVID-19 lockdown in March 2020, the average house price has increased by a whopping 18.2%, or £43,577. Two years ago there was huge levels of economic uncertainty, but the UK property market has shown its resilience.
Buyer demand has been strong, particularly with properties offering greater space indoors and outdoors. The UK property market performed especially strongly throughout 2021, and this momentum continued into the beginning of this year.
The pace of the housing market has shown no signs of slowing down moving into spring. Surging demand paired with low supply has been a major factor for increasing house prices.
While more properties are coming onto the market, housing supply is still struggling to keep up with this high level of demand.
Is a slowdown on the way for the UK property market?
Some professionals in the property industry have been predicting a slowdown within the UK property market. The cost of living crisis, in addition to increasing interest rates, could slow the momentum of house price growth later this year.
Charlotte Nixon, mortgage expert at Quilter, comments: “Given the increased financial instability, first-time buyers and prospective homemovers will likely think twice before embarking on the expensive process of buying a new home.”
Others in the property industry are predicting house price growth to remain strong throughout the rest of the year.
James Forrester, managing director of Barrows and Forrester, adds: “Fears around the increasing cost of living and a number of interest rate increases are yet to make a dent and so the outlook for the year ahead is a positive one where market values are concerned.”
As the last two years have clearly shown, predicting how external events will impact the UK property market can be difficult. Few would have been able to predict just how strong and resilient the sector would prove to be throughout the COVID-19 pandemic.
What does this mean for property investment?
With house price growth currently so strong, it has made it ever important for buyers and investors to secure a property at a competitive price.
From a property investment perspective, the UK property market remains one of the strongest assets to invest in, but securing a good price now, along with a competitive mortgage deal, could be even more key.
Additionally, the recent steep house price growth has made it increasingly difficult for first-time buyers, and the rising cost of living has created an additional barrier.
This will likely mean that the number of tenants relying on the private rented sector will remain high, which will further put pressure on demand for privately rented accommodation across the UK.
As the rental sector is an important part of the UK property market, property investors who invest in the right areas, and particularly at the right price, are securing strong returns.
To read the original article click here