UK house price boom – will the upward trend continue? - Palmers Solicitors

UK house price boom – will the upward trend continue?

UK house price boom – will the upward trend continue?

Last year saw a substantial increase in house prices. A new study has shown that the UK housing market has surpassed many other countries, in part due to some buyers amassing savings during lockdown.

According to Knight Frank’s global house prices index the value of homes across 56 countries and territories increased by 9.4 per cent on average – with 96 per cent of all markets enjoying positive price growth.

The UK ranked at 21 out of 56 markets, registering 11.8 per cent nominal annual growth and eight per cent in real terms, adjusted for inflation.

The latest figures from the national estate agency is not far off the Office for National Statistics’ (ONS) own data in the UK House Price Index. According to the latest figures from October, the annual rate of house price inflation was 10.2 per cent, with the average home costing £268,000.

With such a strong upward trend in property prices in the UK, are further increases anticipated in 2022?

One new obstacle, which may lie in the way of homeownership or investment for some, is the Bank of England’s (BoE) decision to raise UK interest rates to 0.25 per cent in December.

The initial result of the rise was that tracker mortgage rates increased, making mortgages dearer for customers with standard variable rate home loans.

The rate rise is also likely to mean higher initial rates for those seeking a new fixed-rate mortgage, which may be off-putting for some purchasers.

The availability of buyers, curtailed by the higher costs of mortgages, could dampen the property market – especially given the general cost crisis that the UK public faces.

Nevertheless, much of the recent boom in property prices has been driven by supply versus demand rather than any other factor.

Nicola Tubbs, a Director with Palmers Solicitors and Head of the Residential Conveyancing team, said: “These reports that suggest the housing booms is showing no sign of slowing certainly tallies with our own personal experiences here at Palmers.

“Last autumn, many predicted that the end of the stamp duty holiday would see a cooling of the housing market, but the UK only has a limited supply of housing and the speed at which new homes are being built, especially at the lower end of the market, will mean that buyers can continue to ask more for their properties.

“This is particularly true in the Thames Valley area with high demand for properties close to good transport links, schools and other amenities.

“That said, with many people moving to a work from home or flexible model of working, commuting distance may be less of an issue for some people, meaning that homes in rural areas are also becoming more desirable.”

Nicola added: “Those who are planning to move in 2022 are advised to do the preliminary work, including finding a suitable conveyancing solicitor before putting in an offer so that delays are kept to a minimum.”

For help and advice with all residential property matters including conveyancing, please get in touch with our expert team today.