UK house prices continue to advance unrestrained, and on average are up £29,000 over the last year[i]. The Nationwide House Price Index rose by 12.6% year-on-year in February, an eight-months high (chart of the month), and fast advancing towards last summer’s 17-year high. Compared to January, prices rose by 1.7%, the fastest monthly price rise since last summer[ii]. According to Rightmove, the price of properties coming to the market increased by 2.3% in February, up by £7,785 in just a month and the biggest monthly jump in pounds recorded by Rightmove in more than twenty years[iii]. The Halifax House Price index saw a similarly robust trend in February: the 10.8% annual rate of growth was the strongest level witnessed since June 2007, pushing the average house price up to another record high of £278,123[iv]. According to the Halifax House Price index, the past twelve months have witnessed the biggest one-year cash house price rise recorded in over 39 years of index history[v].
Chart of the month: Monthly UK house price, annual % change
Source: Nationwide House Price Index, Blend Network
Market Commentary
- According to Nationwide, a combination of robust demand and limited stock of homes on the market has kept upward pressure on prices. This buoyancy has been described by Nationwide as ‘a little surprising’[vi] given the escalating pressure on household budgets from soaring inflation, which reached a 30-year high of 5.5% in January.
- The Halifax House Price Index points out that two years on from the start of the Covid-19 pandemic, average UK property values have increased by £38,709 (+16%) since February 2020[vii]. This shocking figure is more than the average salary on the UK.
- In order to put the price increase of the past two years into perspective, Rightmove points out that average asking prices have risen by nearly £40,000 in the two years since the pandemic started, compared to just over £9,000 in the previous two years[viii].
- Savills’ latest UK Housing Market Update reports that the market remains hot as continued supply-demand imbalance fuels price growth. They expect this supply-demand imbalance will be the main short term driver of house price growth[ix].
Property Market News
- Activity in the market remains high: according to TwentyCi as reported in Savills’ latest UK Housing Market Update, property sales agreed in February were 31% above the 2017-19 average. Meanwhile, Bank of England data shows that mortgage approvals in January were 12% above the 2017-19 average[x]. So, demand remains strong and there is still a large pool of buyers actively looking for new homes.
- Last week the Bank of England (BoE) rose interest rates for a third time in three months to 0.75%, with analysts expecting rates to hit 1% by the summer and 1.25% by year-end. The bank has been under pressure to continue to tighten monetary policy to tame the dramatic surge in inflation that has been intensified by the war in Ukraine.
Figure 1: Annual increase in house prices (cash terms)
Source: Nationwide House Price Index, Blend Network
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[i] Source: Nationwide House Price Index, https://bit.ly/37mn34l
[ii] Source: Nationwide House Price Index, https://bit.ly/37mn34l
[iii] Source: Rightmove House Price Index, https://bit.ly/3i3s2ZM
[iv] Source: Halifax House Price Index, https://bit.ly/3J9oCAU
[v] Source: Halifax House Price Index, https://bit.ly/3J9oCAU
[vi] Source: Nationwide House Price Index, https://bit.ly/37mn34l
[vii] Source: Halifax House Price Index, https://bit.ly/3J9oCAU
[viii] Source: Rightmove House Price Index, https://bit.ly/3i3s2ZM
[ix] Source: Savills March UK Housing Market Update https://bit.ly/3JcP3W7
[x] Source: Savills March UK Housing Market Update https://bit.ly/3JcP3W7
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