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Best and worst spots for UK house price growth 2021 revealed

The UK’s top house price hotspots in 2021 have been revealed, with Taunton in Somerset shown to have the highest growth in house prices and Westminster in London was shown to have the lowest growth.

Banking company Halifax said that in 2021 average house prices in Taunton have increased by more than a fifth (21.8%), compared with a 6.2% increase across the UK generally.

In cash terms, the average house price in Taunton rose by £56,546 to £315,759.

Meanwhile, Westminster in central London recorded the biggest fall of any area, with average house prices there down by 6.9%.

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Additionally, nowhere in London made it on the top 20 list of locations where prices increased.

Russell Galley, managing director at Halifax, said: “As the county town of Somerset, this year’s house price winner, Taunton, has a lot to offer home-buyers with its high quality of life and great transport links to major towns and cities across the South West.

“Like Taunton, many of the areas that saw the biggest house price growth over the last year enjoy a combination of greater affordability and space compared to nearby cities.

“Places like Bolton, Newark, Bradford and Hamilton – where there are a broad range of property types and settings – all offer significantly better value than their more metropolitan neighbours.”

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Top 20 UK locations for highest growth of house prices

1. Taunton, South West, £315,759, up by £56,546, 21.8%

2. Newark, East Midlands, £280,934, up by £46,732, 20.0%

3. Rochdale, North West, £206,098, up by £32,123, 18.5%

4. Chippenham, South West, £381,181, up by £58,322, 18.1%

5. Braintree, South East, £356,216, up by £54,236, 18.0%

6. Widnes, North West, £222,876, up by £33,628, 17.8%

7. Motherwell, Scotland, £177,118, up by £26,103, 17.3%

8. Bolton, North West, £212,671, up by £30,818, 16.9%

9. Hereford, West Midlands, £306,872, up by £44,336, 16.9%

10. Walsall, West Midlands, £230,972, up by £31,614, 15.9%

11. Bradford, Yorkshire and the Humber, £170,684, up by £23,323, 15.8%

12. Swansea, Wales, £211,590, up by £28,360, 15.5%

13. Kettering, East Midlands, £285,103, up by £36,783, 14.8%

14. Maidstone, South East, £370,964, up by £47,756, 14.8%

15. Newton Abbot, South West, £326,623, up by £42,014, 14.8%

16. Spalding, East Midlands, £264,668, up by £33,703, 14.6%

17. Wirral, North West, £276,042, up by £34,936, 14.5%

18. Scunthorpe, Yorkshire and the Humber, £176,186, up by £21,986, 14.3%

19. Doncaster, Yorkshire and the Humber, £201,824, up by £25,096, 14.2%

20. Hamilton, Scotland, £159,176, up by £19,225, 13.7%

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Top 20 UK locations for lowest growth of house prices

1. Westminster, London, £738,088, minus £54,809, minus 6.9%

2. Airdrie, Scotland, £150,874, minus £6,023, minus 3.8%

3. Hammersmith and Fulham, London, £716,541, minus £24,525, minus 3.3%

4. Coatbridge, Scotland, £145,880, minus £3,435, minus 2.3%

5. Islington, London, £716,554, minus £11,368, minus 1.6%

6. Kirkcaldy, Scotland, £157,663, up by £1,774, 1.1%

7. Oxford, South East, £482,893, up by £5,808, 1.2%

8. Croydon, London, £436,441, up by £6,502, 1.5%

9. Inverness, Scotland, £198,672, up by £3,137, 1.6%

10. Cambridge, East Anglia, £473,790, up by £8,600, 1.8%

11. Dartford, South East, £353,714, up by £6,616, 1.9%

12. Gravesend, South East, £356,196, up by £8,830, 2.5%

13. Stockton-on-Tees, North East, £190,736, up by £4,739, 2.5%

14. Waltham Cross, South East, £414,071, up by £10,863, 2.7%

15. Glenrothes, Scotland, £151,945, up by £4,695, 3.2%

16. Bexley, London, £416,390, up by £14,444, 3.6%

17. Waltham Forest, London, £530,176, up by £20,733, 4.1%

18. Havering, London, £428,012, up by £16,927, 4.1%

19. Sutton, London, £481,265, up by £19,529, 4.2%

20. Rochester, South East, £325,974, up by £13,499, 4.3%

By Carlo Simone

Source: Bicester Advertiser

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House price growth contracts in October but market still ‘buoyant’

Average UK house price growth in October contracted slightly compared to September, but the property market still remains buoyant.

According to the Office for National Statistics (ONS) latest UK house price index, average prices increased by 10.2% over the year to October, down from 12.3% in September.

The average house price also fell slightly from September’s record level of £271,000 to £268,000 in October.

On a seasonally adjusted basis, average house prices in the UK decreased by 1% between September and October 2021, following an increase of 3.1% in the prior month.

The fall was partially attributed to the roll back of the stamp duty holiday, which was due to end in March and then extended.

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The report said as the tax breaks were due to end in March, it was likely that average house prices at the time were “slightly inflated” as buyers rushed to complete before the deadline. It added that this was “further exaggerated” with the extensions.

The report said despite the slight contraction, average house prices in October were around £24,000 higher than the same period last year.

Regional variation

Wales reported the strongest house price growth of 15.5%, down slightly from 16.5% in September. Average house prices in Wales are now at a record £203,000.

This was followed by Scotland at an 11.3% average house price growth over the year, with average house prices pegged at £181,000.

Northern Ireland’s average house price growth came to 0.7% over the year to Q3, with the average house now costing around £159,000.

From a regional perspective, the East Midlands had the highest annual house price growth with average prices increasing by 11.7%. This is down from 14.2% in October.

London had the lowest annual house price growth at 6.2%, which is an increase from 2.8% in September. However, houses in the region remained the most expensive at £516,000.

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Property market still ‘buoyant’

Kevin Roberts, director at Legal and General Mortgage Club, said despite the end of the stamp duty holiday the market was showing “little sign of cooling down”.

He explained: “A strong labour market, as well as the prospect of locking into record low mortgage rates, have combined to keep housing activity particularly buoyant.

“As the Bank of England seeks to keep a lid on resurgent inflation, borrowers may well be tempted to get a foothold on the property ladder before any rate rise comes into effect.”

He added that it was “uncertain” whether the level of house price growth would remain into the new year, pointing to inflationary pressures and the Omicron variant’s impact on household budgets.

Propertymark’s chief executive Nathan Emerson said while the figures showed a “marginally slowing growth rate” the number of buyers on agent’s books was at an “all-time high”, adding that with stock levels continuing to fall the “imbalance between supply and demand has never been greater”.

He added: “With unemployment low and wage price inflation rising, coupled with suggestions that the Covid-pandemic trend of space and work-driven relocations is ongoing – and even some return to city-living being observed – demand looks set to stay relatively strong into 2022.”

Emerson said whilst there was still some uncertainty around the pandemic and expected interest rate rises the data suggested a “growing but more stable market might be materialising”.

Rob Barnard, director of intermediaries at Masthaven Bank, said with the potential return of some lockdown measures and the ongoing race for space set to continue, demand could increase, especially for more expensive properties with more rooms and outside space.

He added that household budgets could be squeezed in coming months, and said specialist lenders had a “key role to play in helping meet these challenges to affordability and ensuring that those with more complex financial backgrounds are still able to secure a firm foothold on the housing ladder”.

Potential interest rate rises a concern

Mark Harris, chief executive of mortgage broker SPF Private Clients, noted that with inflation coming to a 10-year high there would be more pressure on the Bank of England to increase base rates.

However, he said historically this was rarely done in December, making February rate rises more likely. He added that this would also give the Bank of England time to assess the impact of Omicron variant on economic activity.

He added: “Mortgage rates remain extremely competitively priced, with lenders keen to lend. If the Bank of England relaxes the stress test, this will enable more first-time buyers to realise their home ownership dream, which will help the rest of the market function more effectively.”

Managing director of Sirius Property Finance, Nicholas Christofi, said whilst the stamp duty holiday and potential increase in interest rates could cause a market slowdown next year, the firm was not seeing any reduction in buyer demand so house price growth should remain steady.

He added that whilst a potential increase in interest rates would cause some buyers to pause before transacting there were already measures in place to mitigate this, pointing to the Bank of England’s consultation to remove its affordability stress test.

Written by: Anna Sagar

Source: Your Money

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House price growth picks up pace in September

The pace of annual house price growth picked up in September, rising to 11.8% from 10.2% in August as buyers rushed to make the most of the stamp duty holiday, official figures show.

The average UK house price reached a record high of just under £270,000 which was £28,000 higher than last year, according to the latest index from the Office for National Statistics, which is based on data collected by the Land Registry.

Wales saw the highest annual growth, of any UK nation with average prices up 15.4% to £196,000, followed by Scotland where prices rose 12.3% t0 £180,000, England with growth of 11.5% to £288,000 and Northern Ireland where average prices gained 10.7% to reach £159,000.

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London was the region with the lowest annual growth for the tenth consecutive month, with prices increasing 2.8% year on year to £507,253.

Monthly growth across the UK was 2.5% between August and September on a non-seasonally adjusted basis, compared to 2.9% between July and August.

Mark Harris says: “Annual house price growth continued to edge upwards back in September and, as has been the case for a while, the North West led the way while London lagging behind.

“Lack of stock continues to inflate house prices, although in a less frenetic way perhaps, as buyers search for more space, both inside and out, in less urban locations.

“With inflation ticking up again, the pressure is back on the Bank of England to raise interest rates sooner rather than later.

“Mortgage pricing continues to be a mixed bag, with pricing rising for those requiring 60 to 75 per cent loan-to-values, while higher LTV borrowing costs continue to fall.

“The good news is that lenders continue to broaden policy with many now back at pre-Covid criteria, making it easier for a wider range of people to get a mortgage.”

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Sundeep Patel says: “Low interest rates continue to remain the catalyst for surging demand for sought-after properties as prospective buyers rush to snap them up before the window of opportunity closes and mortgage rates rise.

“However, demand for new properties is still outstripping supply, resulting in inflated prices.

“However, talk of The Bank of England increasing interest rates in the near future may deter some prospective buyers, causing house prices to fall. “Additionally, the holidays tend to be a quieter time in the property market, with many people getting ready to list their homes in the New Year.

“Regardless of continued economic uncertainty, there’s an ongoing need for specialist lenders to cater to the ever-changing financial needs of consumers as we approach the end of yet another turbulent year.”

North London estate agent and former Royal Institution of Chartered Surveyors residential chairman Jeremy Leaf says: “On the one hand, the ONS property index is the most comprehensive of all the surveys but on the other, it is a little dated.

“Nevertheless, it provides an excellent snapshot of housing market activity at the time as most buyers struggled to take advantage of the reducing stamp duty concessions.

“Since then the market has calmed and price growth has softened as so many brought forward moving decisions.

“Prospects remain good, however, as buyers and sellers defy worries about rapidly soaring inflation and rising interest rates.”

By Leah Milner

Source: Mortgage Finance Gazette

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Zoopla: House price growth to cool to 3% in 2022

House price growth will slow to 3% next year and transactions will drop by 20% in 2022 as the market rebalances following a frenetic year, according to forecasts by Zoopla.

However, its analysts do not believe we are seeing the cliff edge in demand that some expected following the end of the stamp duty holiday in September.

The total number of sales agreed in 2021 is on track to hit 1.5m, marking the strongest year since 2007, analysis from Zoopla suggests.

It says the total value of sales for 2021 will hit £473bn, up by 25% or £95bn on last year’s figure of £378bn.

Next year, it forecasts that transaction volumes will slow to 1.2m.

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It expects that headwinds for the next year will come from higher living costs and increased mortgage rates, dampening buying power.

Zoopla expects house price growth will slow from its current rate of 6.6% to around 3% next year.

It says the latest data points to a clear turning point for house price growth, which has now peaked and prices are now rising at a slower rate.

There is currently a huge regional variation in house price growth, ranging from 2.3% in London and 10.4% in Wales, and Zoopla expects above-average increases will continue in the most affordable markets.

Over the next year, it forecasts growth will be strongest in the North West and East Midlands at 4% and weakest in London at 2%.

Delving further into its analysis of the demand and supply issue, Zoopla says that the mix of home buyers has undergone a series of shifts over the past 18 months.

In the immediate aftermath of the first lockdown in 2020, it was wealthier owners in high value homes that were moving.

In 2021 mortgage availability improved and first-time buyers have been returning to the market, taking the mix of movers back to more normal levels.

Zoopla’s analysts believe that current momentum will outweigh emerging headwinds.

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In today’s report, they say:

“The impact of the pandemic on home buying decisions has further to run, albeit it will be less frenetic.

“This will be supported by the scale of financial gains homeowners have seen in the value of their homes since 2020.

“Primary market momentum catalysts for 2022 stem from the ongoing reevaluation of housing needs, increased equity, and moves in parts of the labour force to more hybrid working.

“Taken together, these factors will continue to bring buyers and sellers into the market.

“Furthermore, the scarcity of homes is set to continue well into 2022, supporting headline house price inflation.

“Headwinds for the market will come from increases in the cost of living, higher levels of inflation and tax increases in 2023.

“The consensus among economists is that higher mortgage rates look to be a certainty in 2022, which in turn will directly impact household buying power.

“Mortgage rates are likely to increase modestly in 2022 ending the year closer to 3%, which would dampen demand for some buyers with mortgage rates still being low by historical standards.

“Any increase in mortgage rates is more likely to impact sales volumes than prices.

“By contrast, existing borrowers are more insulated from higher mortgage rates than they have been in the past and, even if they do go up, competition amongst lenders will remain intense.

“Over 80% of mortgages are on fixed rates, many for five years or more, and stress testing has already ensured they can afford mortgage rates of 7% – significantly higher than where the mortgage market is heading.”

Zoopla executive director Richard Donnell adds: “2021 is set to be a record year for the housing market with the most moves by homeowners since 2007 and nearly £500bn of home sales.

“The impact of the pandemic on the housing market has further to run but at a less frenetic pace.

“We expect the momentum in the market to outweigh some emerging headwinds from higher living costs and the risk of higher mortgage rates.”

By Leah Milner

Source: Mortgage Finance Gazette

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House price growth jumps in ‘insane September’

House prices in September experienced a growth rate not seen since February 2007, as buyers rushed to beat the final stamp duty holiday deadline.

The Halifax house price index, published today (October 7), showed prices rose by 1.7 per cent in the month, up from 0.8 per cent in August.

Annual house price inflation was 7.4 per cent in the year, up from 7.2 per cent in August, with the average house price in the UK now worth £267,587.

This reversed the recent three-month downward trend in annual growth, which peaked at 9.6 per cent in May.

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The rush to beat the stamp duty deadline could have played a part, experts believe.

The stamp duty nil rate band, which had been raised to £500,000 in July last year, dropped to £250,000 in June and returned to £125,000 at the end of September.

Russell Galley, managing director at Halifax, said: “While the end of the stamp duty holiday in England – and a desire amongst homebuyers to close deals at speed – may have played some part in these figures, it’s important to remember that most mortgages agreed in September would not have completed before the tax break expired. This shows that multiple factors have played a significant role in house price developments during the pandemic.”

Galley said the “race-for-space” as people changed their preferences had an impact, as well as the limited housing supply.

He added: “With estate agents reporting a further reduction in the number of houses for sale, this is likely to underpin average prices – though not the recent rate of price growth – into next year.”

George Franks, co-founder of London-based estate agents Radstock Property, said: “September’s insane price growth offers yet more proof that life and work changes brought on by the pandemic have been equally, if not more, influential on the housing market than the stamp duty holiday.”

He also pointed to the lack of supply, “coupled with absurdly low mortgage rates”, which he said would support prices in the short term and negate the impact of rising inflation.

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“The fundamentals continue to favour a stabilisation of the market rather than a fall in values.”

James Forrester, managing director of Barrows and Forrester, agreed the stamp duty break had less of an influence than many had thought.

“While there will no doubt be some form of erratic price movement on a month to month basis until the market settles down for good, we don’t expect the removal of this tax incentive to significantly impact the market at any level,” he said.

But Karthik Srivats said the data showed that things had not got any easier for first-time buyers.

“Growth in prices continues to outstrip wages and raising a deposit the old-fashioned way through patient savings remains an unrealistic dream for most.”

He added one piece of good news for first-time buyers was that they had access to the stamp duty relief on purchases of up to £300,000 which may give them a “slight edge” going forward.

He added: “Rock bottom interest rates and a continued demand for bigger homes with more outdoor space may well support buyer activity for some time to come.”

By Sally Hickey

Source: FT Adviser

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UK house prices forecast to rise by up to 3.5% a year between 2022 and 2024

Hamptons has released its housing market forecast for next year and beyond, predicting that property price growth will remain above pre-pandemic levels as the cycle ends in 2024.

The company believes that summer 2021 marked peak house price growth. As we move into autumn and winter they expect price growth to slow, ending the year at 4.5% across Great Britain.

It says that a second wave of lockdown-induced demand will keep price growth in positive territory at 3.5% in 2022, 3% in 2023 and 2.5% in 2024.

London is set to underperform the rest of the country until the house price cycle ends in 2024. They forecast prices in the capital to end the year up 1.5% and then rise by 1.0% in 2022, 1.5% in 2023, before accelerating to 3% in 2024.

The North East will be the top performer over the next four years. Hamptons expect house prices to rise 21.5% in Q4 2024, outpacing the Great Britain average of 13.5%.

A record-breaking first half of the year means that more homes will have sold in 2021 than in any year since 2007. The property firm forecast 1.5 million completions in Great Britain in 2021.

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Covid-19 induced changes mean households will make more moves than pre-pandemic times. It is forecast that transactions will fall marginally to 1.25 million in 2022 before reaching a new normal of 1.3 million in 2023 and 2024.

The rapid pace of rental growth will slow. They expect rents in Great Britain to end the year up 3%, before slowing to 2.5% in 2022 as affordability bites.

By the end of 2024 Hamptons expect rents to have risen by 10.0%, led by Southern regions. Meanwhile, London will lag until growth accelerates in 2024.

Aneisha Beveridge, head of Research at Hamptons, said: “The housing market has confounded expectations and forecasts in past months. Back in the autumn of 2020, such were the economic challenges being faced that we could not have envisaged the extraordinary demand for relocation which we have seen this year. But there has been a huge attitudinal change towards property, which cannot be attributed to the stamp duty holiday alone.

“People now place a higher value on their homes, having have spent more time in them than ever before. Flexible and remote working, which look set to continue, have encouraged households to make bigger moves. As a result, more homes are likely to have been sold in 2021 than in any year since 2007. This is why we also think housing activity will surpass pre-pandemic times in 2022 and beyond.

“The pandemic has accelerated the closing of the house price gap between London and the rest of the country. Even so, we still expect London to underperform the rest of the country until 2024, when the cycle is likely to end. While we will see a degree of levelling up over the next few years, the gap between house prices in the capital and the other regions is likely to be wider than that seen at the end of the previous cycle in 2007. And this divergence will set the pattern for future performance.”

2021

Hamptons believe that summer 2021 marked peak house price growth across Great Britain, which is now expected to slow…

It says that the property market remains resilient as the stamp duty holiday draws to a close, but expects price growth to soften towards the end of the year.

The latest ONS data shows that residential property prices across Great Britain rose by 8% in the 12 months to July, down from a peak of 13.2% in June. The end of the stamp duty holiday combined with the fact that house prices were already recovering at the end of last year means they expect price growth to soften to 4.5% by Q4 2021. The average price of a home in Great Britain will end the year around £258,000, a similar level to July 2021.

While growth will slow as the year draws to a close, 2021 will remain a strong year for price appreciation, compared with the performance of recent previous years.

Scotland is set to the see the strongest price growth in Q4 2021 (7%), followed by the North East (6.5%) and Wales (5.5%). The average price of a home in the North East passed its pre-financial crisis peak for the first time this year.

Stretched affordability and the rise of flexible working have encouraged households to leave the capital, making London the weakest performing region. That said, Hamptons expect house prices in the capital to end the year up 1.5%, led by Outer London. The South East has been the biggest beneficiary of London outmigration. Here prices are expected to rise 5.0% in Q4 2021 compared with the same time last year.

2022

A second wave of lockdown-induced demand will keep price growth above pre-pandemic levels at 3.5% in 2022…

The estate agency says that a desire for more space and the flexibility for workers to split their time between the home and office will continue to stimulate the market in 2022. Equity-rich homeowners have dominated property market activity since the start of the pandemic, but they expect a second wave of lockdown-induced demand from those who have been unable to move this year.

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Hamptons expect mortgage rates for all borrowers to hit rock bottom in 2022 which will boost affordability, particularly for first-time buyers using bigger mortgages who saw rates soar during the early days of the pandemic.

House prices are forecast to rise by 3.5% across Great Britain in Q4 2022, in line with incomes. Price growth will be strongest in the Northern Regions, alongside Wales and Scotland, where affordability constraints are lower. Next year they expect the North East to record the strongest price growth (6.0%) followed by Scotland, Wales, Yorkshire & the Humber and the North West at 5%. Meanwhile, London will continue to see the weakest growth at 1%.

2023

The North will drive growth of 3% in 2023 as we approach the end of the regional cycle…

The economic recovery will determine the medium-term outlook for the housing market, with income growth and the pace of interest rate rises being particularly crucial to the direction of house prices. If interest rates increase more rapidly than expected, this will dent affordability and put a dampener on price growth.

However, the combination of an economic recovery and the enhanced importance of homes should keep activity above that of the pre-pandemic era. Hamptons forecast prices in Great Britain to rise 3% in Q4 2023.

2024

The cycle is likely to come to an end, but prices across the regions will be more widely spread than ever…

Typically, a house price cycle lasts around 16 years. The cycle usually begins with price growth in London steaming ahead, as it did between 2008 and 2016. This tends to be followed by a narrowing of the price gap between London and the regions as prices in the North catch up.

In the final year of a cycle, there are often signs of prices in London accelerating. And they expect this to be the case in 2024, with London house prices forecast to accelerate from 1.5% in Q4 2023 to 3.0% in Q4 2024.

However, the gap between London and the rest of the country is set to remain wider than at the end of previous cycles. With house prices in London forecast to rise by 7.0% over the next four-years, by the end of 2024 Hamptons expect the average home in the capital to cost 87% more than the national average. At the beginning of the house price cycle in 2008, the gap stood at 59%, rising to a peak of 117% in 2016.

Hamptons forecast the North East to see the strongest price growth over the next three years, with prices here expected to rise by 21.5%. But by 2024, the average price in the region will remain 41% below the national average, unless economic growth in the region picks up pace.

A new cycle begins…

Historically, the beginning of a new house price cycle has been synonymous with a sharp price correction. However, Hamptons do not expect this to be the case this time. A low interest-rate environment, tighter lending criteria coupled with the fact there’s been considerably less house price growth over the last 16 years means we’re more likely to see a continuation of modest price growth, such as we’ve witnessed during the last five years, rather than a boom followed by a bust.

To put this into context, between 1976 and 1991 house prices across Great Britain grew by 466%; between 1992 and 2007 they rose 265%; but between 2008 and 2024 we expect house prices to rise by 61%. This means a period of more balanced price growth across the regions as a new cycle dawns.

Regional house price forecast (Q4 of each year)

20202021 (F)2022 (F)2023 (F)2024 (F)4 Year Forecast
Greater London4.0%1.5%1.0%1.5%3.0%7.0%
East of England4.3%4.0%2.5%2.5%2.0%11.0%
South East4.7%5.0%3.0%2.5%2.0%12.5%
South West6.9%3.0%3.0%2.5%2.5%11.0%
East Midlands6.8%4.0%4.0%3.0%2.0%13.0%
West Midlands6.2%5.0%4.0%3.0%2.0%14.0%
Yorkshire & Humber7.5%4.0%5.0%4.0%3.0%16.0%
North West8.5%4.5%5.0%4.0%3.0%16.5%
North East6.2%6.5%6.0%5.0%4.0%21.5%
Wales7.4%5.5%5.0%3.5%3.0%17.0%
Scotland7.4%7.0%5.0%4.5%3.5%20.0%
Great Britain6.1%4.5%3.5%3.0%2.5%13.5%
Source: ONS & Hamptons

Transactions

Covid-19 induced changes mean households will make more moves than pre-pandemic

A record-breaking first half of the year means that more homes will have sold in 2021 than in any year since 2007.  We expect an increase in completions in September, as the stamp duty holiday comes to an end, but activity looks set to moderate as the year draws to a close.  By the end of 2021, we forecast 1.5 million homes to have been sold across Great Britain (chart 2).

In 2022, activity will be supported by households who have been unable to move home in 2021 as a result of affordability pressures, job uncertainty, or because they could not find a suitable property.

First-time buyer numbers should increase next year as the rates on higher-loan-to-value mortgage deals become cheaper.  We forecast there to be 1.25 million transactions across Great Britain in 2022, 17% fewer than 2021, but 22% more than in 2019 (chart 2).  This is a smaller hangover than after previous stamp duty holidays.

Thanks to a growing economy and low-interest rates, transactions will reach 1.3 million in 2023 and 2024 (chart 2).  As people spend more time in their homes and as a consequence are on the hunt for space, we expect transactions to remain above pre-pandemic levels.

Rental Growth

The rapid pace of growth is expected to slow

We forecast that the rapid pace of growth in the rental market will slow in 2022.  But the rate of increase should still be above pre-pandemic levels, supported by tenants’ willingness to pay for extra space and by unprecedentedly low levels of stock.

We forecast that rents will rise by an average of 2.5% in 2022 across Great Britain, following an increase of 3.0% this year (chart 3).  Growth will be dictated by what happens to peoples’ incomes in 2023 and 2024.

Growth is likely to be slower in the capital, particularly in Inner London where rents may not return to pre-pandemic levels until the middle of 2022.  We are forecasting overall rental growth in London of 0.5% this year, with pickup to 1.0% in 2022 and 1.5% in 2023.  Rental growth is then expected to accelerate to 3.5% in 2024 (chart 3).

The regions outside London, where affordability is less stretched, will see stronger growth.  Rents seem set to move in similar directions, with no significant North-South divide.  The South is likely to see marginally stronger growth, with rents here forecast to rise 14.5% by the end of 2024.

By MARC DA SILVA

Source: Property Industry Eye

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House price growth cooling but far from stagnant

The latest Halifax House Price Index is reporting year-on-year inflation cooling slightly to 7.1% with monthly increases in August of 0.7% and the average house price in the UK now standing at £262,954.

Russell Galley, Managing Director, Halifax, said: “Average house prices climbed again in August, with the cost of a property increasing by 0.7% or £1,789. Back-to-back monthly price gains have now pushed the cost of a typical home to a record of £262,954, topping the previous high (£261,642) recorded in May this year.

“Given the rapid gains seen over the past 12 months, August’s rise was relatively modest and the annual rate of house price inflation continued to slow, hitting a five-month low of 7.1% (versus 7.6% in July). However, compared to June 2020, when the housing market began to reopen from the first lockdown, prices remain more than £23,600 higher (or +9.9%).

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“Much of the impact from the stamp duty holiday has now left the market, as highlighted by the drop in industry transaction numbers compared to a year ago. However, while such Government schemes have provided vital stimulus, there have also been other significant drivers of house price inflation.

“We believe structural factors have driven record levels of buyer activity – such as the demand for more space amid greater home working. These trends look set to persist, and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month.

“Moreover, the macroeconomic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels. Coupled with a supply of properties for sale that looks increasingly tight, and barring any reimposition of lockdown measures or a significant increase in unemployment as job support schemes are unwound later this year, these factors should continue to support prices in the near-term.”

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Regions and nations house prices:

As would be expected given the trends at a UK level, annual house price inflation is slowing in most nations and regions. Wales remains the strongest performing area, with annual house price inflation at 11.6% and the only double-digit rise recorded in the UK during August.

The South West is also still experiencing strong growth at 9.6%, likely reflecting the ongoing demand for rural living within the region. Some areas do appear to have headroom for even stronger price growth, with annual house price inflation in the North East now up to 8%.

Northern Ireland has also seen prices rise further with annual house price inflation of 9.3% in August, though Scotland has seen price growth slow to 8.4%.

Greater London continues to lag the rest of the country, registering just a 1.3% annual increase in prices in August and, over the latest rolling three-monthly period, was the only region or nation to record a fall in prices (-0.3%). The year-over-year rise in London was also the weakest seen in 18 months. Though at a cost of £508,503, typical properties in the capital remain far above the national average national price.

Source: Property118

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Greater Manchester and Merseyside both see 20% house price rises

House price growth rates continue to climb strongly in England and Wales with prices increasing by a whopping 20% in both Greater Manchester and Merseyside, according to the latest e.surv Acadata House Price Index.

House prices are up 13.4% on an annual basis with the average house price now standing at £343,658.

The lowest growth has been seen in London where 10 boroughs reported annual price falls.

Richard Sexton, director at e.surv, said: “Overall, we can see the market continues to enjoy the effect of the government’s stamp duty holiday.

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“Buyers are still striving to complete purchases in time to benefit from the maximum tax break ahead of the change in June to a tapered deadline.

“Completion prices for transactions funded by both mortgages and cash grew by a startling 13.4% annually in May, and at a national level, prices in England and Wales rose on a monthly basis by some £1,800, or 0.5%.

“However, it is notable that the monthly price increases over the last three months are the lowest since June 2020, probably a reflection of the rapidly approaching end of the stamp duty holiday.

“Regionally, there has been continued price growth across Wales and all nine English regions. Prices performed particularly strongly in the North West which achieved its highest rate of annual house price growth,18.4%.

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“Growth in the North West is underpinned by activity in both Greater Manchester and Merseyside, where prices are increasing at a staggering annual rate of 20.9%. London and the South East have also seen growth, although at a lower level. It should be remembered that London property prices have already experienced a boom in the years following the global financial crisis, a rise not experienced by many other UK regions.

“Our property type data shows there has been a shift in the kind of homes that buyers are looking for.

“Working from home has encouraged interest in larger homes with gardens outside city centres.

“The demand for flats in central and inner areas of London and other cities has not been as strong as for other types of homes due to lifestyle changes and new working arrangements, alongside the absence of overseas buyers in prime central London due to COVIDrestrictions. The impact of the pandemic on flats has been amplified by the issues surrounding cladding for mortgage lenders.”

Source: Mortgage Introducer

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Nationwide: House prices up 10.9% in year to May

Annual house price growth was up 10.9% in May, the highest level in nearly seven years, the latest Nationwide house price index has revealed. On a month-on-month basis house prices were up 1.8% in May, down from the 2.3% rise recorded in April.

The figures leave the average price of a home at a new record high of £242,832.

Robert Gardner, Nationwide’s chief economist, said: “Housing market activity is likely to remain fairly buoyant over the next six months as a result of the stamp duty extension and additional support for the labour market included in the Budget, especially given continued low borrowing costs, improving credit availability and with many people still motivated to move as a result of changing housing preferences in the wake of the pandemic, as highlighted above.

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“With the stock of homes on the market constrained, there is scope for annual house price growth to accelerate further in the coming months, especially given the low base for comparison in early summer last year.

“Further ahead, the outlook for the market is far more uncertain.

“If unemployment rises sharply towards the end of the year as most analysts expect, there is scope for activity to slow, perhaps sharply, though even this could potentially be offset by ongoing shifts in housing preferences, if current trends are maintained.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said he expects prices to keep rising.

He said: “Although we may have been wondering if the glorious sunshine was ever going to arrive, the continued upwards trajectory of the property market comes as no real surprise. Buyers wanting more space, trying to take advantage of the extended stamp duty holiday and the lack of supply, are all pushing values upwards.

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“Lenders retain a strong appetite to lend with increased price competition leading to lower rates. Platform is launching the cheapest ever two-year fix this week, pegged at just 0.95%.

“Rates this low will continue to support the market, while the increased availability of low deposit mortgages will assist first-time buyers who are finding rising house prices increasingly difficult to deal with.’

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: ’These figures, though strong and coming on the back of last month’s fastest monthly rise since 2004, reflect market activity in the last few months when prices were turbo-charged by the extension of the stamp duty holiday, as well as continuing shortage of houses in particular, low mortgage rates and faster vaccine rollout.

“Looking forward, these factors aren’t likely to change anytime soon, even if demand cools a bit, which we are already starting to see. As a result, prices will soften but not correct and next month’s index is likely to show strong but more moderate growth.”

Source: Mortgage Introducer

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UK house prices hit new record high after growing at fastest rate in five years

UK house prices grew at the fastest pace in five years last month as the stamp duty holiday continued to buoy the market.

Average UK house prices in April reached a new record high of £258,204, an annual increase of 8.2 per cent and a monthly rise of 1.4 per cent.

Almost £20,000 has been added to the value of the average home since April last year, according to the latest Halifax House Price Index.

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“The stamp duty holiday continues to add impetus to an extremely active market, magnifying the current shortage of available homes as buyers aim to take advantage of the Government scheme,” said Halifax managing director Russell Galley.

“ The influence of the stamp duty holiday will fade gradually over the coming months as it’s tapered out but low stock levels, low interest rates and continued demand is likely to continue to underpin prices in the market.”

Boom in “full swing”

Laith Khalaf, financial analyst at AJ Bell, said: “The house price boom is still in full swing, as white line fever is pushing buyers into the market to take advantage of the recently extended stamp duty holiday.

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“Mortgage approvals have fallen back in recent months, which hints that some froth may be coming off the very top of the market. But we’re approaching the busy summer season, and there are plenty of tailwinds that will help to keep prices elevated moving forwards.

“The stamp duty holiday is gradually being tapered away by the end of September, but borrowing costs are still low, and the government continues to offer support in the form of Help to Buy and the Mortgage Guarantee Scheme. We also know that plenty of consumers have built up a war chest over the pandemic which can help them trade up the property market, perhaps to get some extra space for a home office.”

By Jessica Clark

Source: City AM

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