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UK average house prices have increased by 8.0% over the year to July 2021, down from 13.1% in June 2021, according to the Office for National Statistics (ONS) House Price Index.

The average UK house price was £256,000 in July 2021, which is £19,000 higher than the same time last year, following the record high of £265,000 in June 2021.

Average house prices increased over the year in England to £271,000 (7%), in Wales to £188,000 (11.6%), in Scotland to £177,000 (14.6%) and in Northern Ireland to £153,000 (9.0%).

London continued to be the region with the lowest annual growth (2.2%) for the eighth consecutive month.

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Sundeep Patel said: “July’s figures show house price growth was maintained, with prices rising by 8% meaning the average UK house price now sits at £256,000- £19,000 higher than this time last year.

“However, after months of highly inflated prices caused by unprecedented demand from hopeful buyers looking to snap up properties outside of major cities, and a race for space as we adapt to hybrid working, we are perhaps starting to see house prices stabilise slightly as the dust starts to settle following nearly 18 months of uncertainty.

“With consumer confidence increasing and an ongoing discrepancy between supply and demand when it comes to housing stock, we’re yet to see what the market could look like in a few months’ time.

“Also, with furlough ending this month, many will be anticipating the wave of support needed by those facing financial challenges.

“Whether the high street is adept enough to deal with these cases, or if this means more opportunity for specialist lenders to help is the next priority.”

John Eastgate added: “House price strength is set to continue despite the ending of the Stamp Duty holiday.

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“The dramatic shortage of supply looks set to persist and the economic backdrop will underpin valuations.

“The difference this time of course is that, if anything, London price rises are behind many other parts of the country, as buying habits change and buyers’ priorities shift towards quality of life rather than quality of commute. London prices will come back strongly however as we see a return to normality

“Mortgage rates are more attractive than ever, however accelerating house prices will do nothing to ease affordability challenges and we should expect to see continued growth of the private rental sector, which plays an essential role in the housing landscape.”

Stuart Law said: “The stamp duty holiday was a huge motivator for buyers and fuelled one of the busiest periods of market activity we’ve seen for a decade.

“With higher tax rates starting to phase back in from July, it is no surprise that we’ve seen an impact with house price growth temporarily stalling somewhat as a result of that incentive disappearing.

“The real problem though, concerning those looking to get on the housing ladder or move up it, is the continued and acute lack of stock which defines the current housing market.

“This has substantially driven house prices up for many years, with most properties nowadays subject to competitive bidding situations, and it is continuing to hinder market activity and apply upward pressure on pricing.

“Moderate house price growth is good for homeowners on balance – a little like modest wider inflation – but unbalanced or excessive house price growth is likely to be unsustainable and restrict the ability of many prospective buyers looking to enter the market.

“Demand continues to outstrip supply and we are likely to see house prices continue to grow well over inflation over the coming months as more and more people seek to adapt their lifestyle to a reimagined post-pandemic world, striking a new balance between home and work. All of this suggests that we are set for further substantial house price growth this year and next.

“The only way to introduce balance into the supply and demand equation in a sustainable way is to dramatically increase our housebuilding output and draw on the expertise of small, local developers who can quickly leverage their local knowledge to provide new homes where they are most needed and we are hugely supportive of that, funding one in 12 of all new SME-built homes.”

By Jake Carter

Source: Mortgage Introducer

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