UK house prices grow at fastest rate for 17 years
UK house prices have risen to £33,000 in the past 12 months.
UK house prices grew in March at the fastest rate since 2004, continuing the ascent to new record levels – with the price of an average home now a fifth higher than at the start of the coronavirus pandemic.
Prices rose by 14.3% in the year to March, the strongest pace of increase since November 2004, when the UK experienced a housing boom that preceded the financial crisis, according to Nationwide, the UK’s largest building society.
The price of an average UK home hit £265,312, more than £33,000 higher than March 2021. Price rises were evident across the country, with prices in Wales increasing by 15% over the year. House price growth accelerated in every region of England and Scotland.
Detached homes have gone up nearly £68,000 in price since the start of pandemic, a 22% rise, as people working from home sought out bigger properties, while average flat prices have increased by £24,000, or 14%.
The near-relentless rise in house prices has come despite the economic damage from the pandemic, which caused a deep slump in activity. However, government wage support schemes and savings during lockdowns have supported the housing market. Nationwide estimated that reduced spending has meant that households were on average able to save £190bn more than would have been expected before the pandemic – £6,500 a household, albeit unevenly spread.
The government also intervened with stamp duty cuts, which subsidised the housing industry and helped to keep prices rising as soon as the market unfroze.
Economists are now trying to ascertain whether rising inflation (including unprecedented increases in energy bills from Friday, when the price cap increases) and rising interest rates to combat it will finally dent house prices.
“The housing market has retained a surprising amount of momentum given the mounting pressure on household budgets and the steady rise in borrowing costs,” said Robert Gardner, Nationwide’s chief economist. “A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.”
However, he said he expected the market to slow in the coming months.
“The squeeze on household incomes is set to intensify, with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high,” Gardner said.
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