UK house prices continue to advance unrestrained. According to the Nationwide House Price Index, detached property prices have increased by nearly £68,000 since onset of pandemic, while average flat prices are up by £24,000[i]. The housing price index rose to 14.3% in March, up from 12.6% in February[ii], the fastest increase since November 2004 (chart of the month). According to Rightmove, the price of properties coming to the market jumped by 1.7% in March[iii] – following a 2.3% increase in February that was the biggest monthly jump in pounds recorded by Rightmove in over twenty years[iv]. The Halifax House Price index saw a similarly robust trend in March: annual average UK house prices rose again by over 10%, continuing to track around their highest level since mid-2007[v]. According to the Halifax House Price index, the average house price has risen by 18.2% since the start of the pandemic two years ago[vi].
Chart of the month: Monthly UK house price, annual % change
Source: Nationwide House Price Index, Blend Network
Market Commentary
- According to Nationwide, Q1 saw the largest increase in house price since Q4 2004[vii]. With 15.3% annual growth in average house prices, Wales remained the strongest performing region in Q1 2022, while London remained weakest with 7.4% YoY growth.
- Rightmove expects market to slow in the second half of the year as macro headwinds lead to a more evenly balanced market, although demand will still outstrip supply[viii]. This is also the view sustained by Russell Galley, Managing Director at Halifax who believes that the long-term performance of the housing market remains intricately linked to the health of the wider economy and who expects the significant squeeze on real earnings faced by households to start feeding through to the housing market[xi].
- Savills sustains a more positive near-term view. According to their latest Housing Market Update, despite tantalizing signs of rising supply, the imbalance compared to demand is set to continue and prices are expected to rise over the next few months[x].
Property Market News
- It is still too early to know how the UK property market will be affected by the longer-term economic impact of the war in Ukraine. However, Rightmove initially saw slightly lower buyer demand, but this has now stabilised[xi]. According to Knight Frank, house price growth is likely to slow and return to single digits this year as cost-of-living bites. However, they expect the pace to pick up in prime London as global travel resumes[xii].
- Meanwhile, supply continues to underperform. In Q3 2021 (the latest available data), the number of dwellings where building work had started was down by 3% QoQ and YoY. The number of dwellings completed was also down by 4% QoQ and by 11% YoY[xiii].
Figure 1: UK regional house price growth Q1 2022
Source: Nationwide House Price Index, Blend Network
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[i] Source: Nationwide House Price Index, https://bit.ly/3OmMtzP
[ii] Source: Rightmove House Price Index, https://bit.ly/3KWC8Zs
[iii] Source: Halifax House Price Index, https://bit.ly/3vuXkiM
[iv] Source: Savills UK Housing Market Update – April 2022, https://bit.ly/3Om33zX
[v] Source: Rightmove House Price Index, https://bit.ly/3i3s2ZM
[vi] Source: Knight Frank Global Property Market Insight, https://bit.ly/3uZbbyw
[vii] Source: Department for Levelling Up, Housing & Communities, https://bit.ly/3839mru
[viii] Source: Nationwide House Price Index, https://bit.ly/3OmMtzP
[ix] Source: Nationwide House Price Index, https://bit.ly/3OmMtzP
[x] Source: Rightmove House Price Index, https://bit.ly/3KWC8Zs
[xi] Source: Rightmove House Price Index, https://bit.ly/3i3s2ZM
[xii] Source: Halifax House Price Index, https://bit.ly/3vuXkiM
[xiii] Source: Halifax House Price Index, https://bit.ly/3vuXkiM
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