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How are UK House Price Trends Changing in 2021?
The UK Housing market has experienced a record boom over the last 12 months, with house prices rising 13.4% in the year to June, according to Nationwide.
20th July, 2021
The UK Housing market has experienced a record boom over the last 12 months, with house prices rising 13.4% in the year to June, according to Nationwide.
Robert Gardner, Chief Economist at Nationwide, said that UK house prices are “close to record highs” relative to average household incomes, which is putting extraordinary pressure on first time buyers in particular.
Whilst a majority of Royal Institution of Chartered Surveyors (RICS) members think prices will continue to rise over the next year, there are early signs that the UK property market is starting to cool down.
The tapering of Stamp Duty relief and the announcement of its cessation in September has tempered demand. This, combined with limited supply in the market saw house prices rise just 0.8% in June. This is much lower than the 1.8% and 2.1% increases in April and May and Tim Bannister, Director of Data at Rightmove, says that this signals there are ‘signs of slowing in the frenetic pace’ of the property market.
What are the driving forces behind rising prices?
The pandemic has stimulated housing market activity due to record low interest rates, changing consumer preferences, and government tax holidays on stamp duty designed to prevent a housing market crash.
Where are UK house prices rising the quickest?
Changing consumer behaviour, driven by the pandemic, has caused a ‘race for space’ amongst the British public, with more and more people seeking larger homes in the countryside. Unlike recent booms, the biggest rise in UK house prices have been seen outside of London and the South East of England.
According to data from Nationwide, the sharpest UK house price increases over the past year have been seen in Wales (13.4%) and the North of England, with the North West and Yorkshire & the Humber both posting double digit growth.
What kind of houses are seeing the steepest rise?
Family homes are becoming more popular as people re-assess their priorities during the pandemic and opt for more spacious houses with outside space. That, along with the cladding crisis, has marked a shift in demand from city centre flats towards houses in the countryside and increased UK house prices. According to Zoopla, supply of 2,3- and 4-bedroom homes has fallen over the past 3 years whilst supply of flats has risen. Apartment prices are increasing, but at a slower rate.
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GET MY OFFERHow will UK House prices change in the near future?
Property market experts are expecting stability over the coming months, but a significant slowdown in the sharp increases that have been seen over the past year.
Nationwide predicts that the housing market will slow down ‘sharply’ over the coming months, particularly due to the effect of a weakening labour market and the looming end of the Stamp Duty holiday.
Savills anticipate market stability but expect a ‘lull’ in UK house prices over the coming months due to the end of Stamp Duty relief.
What are the risks?
There are two major risks posed to the housing market and UK house prices in the form of increased interest rates and property chain collapse due to the end of the Stamp Duty holiday.
There are signs that the rate of inflation in the UK economy is beginning to rise. The Bank of England posted an increase in the CPI in April, with inflation rising to 1.5%. If the rate of inflation continues to rise the Bank of England may opt to control it by increasing interest rates. This would, in turn, increase the cost of borrowing, putting some new property buyers who borrowed large amounts of money in financial danger.
Industry experts are predicting that many sales waiting to complete may miss the September deadline date before stamp duty rates return to normal on October 1st. Solegal.co.uk are beginning to issue warnings to their clients that they will not be able to accept liability for any financial loss resulting from transactions completing after 30 September 2021. The Conveyancing association has warned that there are a number of log-jams to work through, and ‘some lenders currently have telephone hold times of two hours’ making completion time lengthier. These things put downward pressure on UK house prices.
How could SmoothSale help you?
Whilst the market has increased over the past year, the end of the stamp duty holiday, the risk of increased interest rates and the potential for a significant number of property chains to collapse poses a significant threat to continued growth.
If you’re looking for another option for the sale of your property, SmoothSale can help. Our cash house buyers service is designed for vendors looking for a guaranteed sale of their property in as little as 7 days. Alternatively, we offer an ‘Investor Marketing’ route to market for vendors who want to sell their property to our network of trusted investors in under 30 days.
Get a cash offer today! Alternatively, get in contact on 0113 539 600 or email info@www.smoothsale.co.uk.
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