UK house prices are rising at their fastest rate since 2007, with average house prices rising by another 0.5% in February – marking the eighth month in a row that house prices have risen and pushing the annual rate of price growth to 10.8%. This jump in February represents the biggest month-on-month increase in more than 20 years. The average asking price in the UK now stands at a new record £348,804, representing an increase of nearly £40,000 in the previous two years.
The continued rise of UK house prices can be attributed, mainly, to the shortage of homes for sale. The supply and demand levels in the UK property market remain unbalanced, with demand continuing to exceed the available supply of properties. With energy prices soaring for millions of households in the UK, it does not seem to have done much to affect the market’s buoyancy.
An increase in supply in the UK property market will inevitably slow down the rise of UK house prices, in February the number of new property listings increased by 11%, however the number of people looking to buy a property increased by 16% continuing the unbalanced level of supply and demand and with March representing the strongest month for competition between buyers in the UK housing market, it’s unknown how quickly raising house prices will slow down. Research from Rightmove also shows that March is the busiest month for when homeowners decide to put their properties on the market, with these statistics showing that more available properties are entering the market, it is predicted that the demand for properties will, eventually, slow down and the supply and demand level in the UK property market will, in time, level out.
David Hannah, principal consultant at Cornerstone Tax discusses the lack of supply in the UK property market:
“Over the past couple of years we have seen a substantial increase in UK house prices. Factors such as the stamp duty holiday have caused more people to consider buying property. However, due to the increase in average house prices, it has made it more difficult than ever for buyers to purchase their first property.
“There is hope that more available properties will enter the UK housing market – thus causing a more manageable supply and demand level and subsequently halting the rapid rise of property prices. I think homeowners will look to take advantage of the record house prices and look to maximise the prices they can get if they sell their property, causing an increase in supply for the UK property market.
“A solution to the global supply issues will cause an increased supply of new builds, providing the UK housing market with some much-needed extra stock, which should subsequently decrease the average UK house prices, but there are many obstacles facing the UK housing market now which has caused a lot of uncertainty.”
