The UK’s yearly rate of house price rocketed to a 19-year high of 15.5% in July, adding £39,000 to the value of the average property in that time.
England and Wales saw even larger annual rises than the UK average, 16.4% and 17.6%, respectively. There are significant differences in house price increase between different regions, showing that the gap between London and other regions has widened.
- South-west England’s annual price growth in July – 20.7%
- London’s annual price growth in July – 9.2%
Commentators noted that the annual rate of price rise had been artificially raised because prices fell in July 2021 as a result of the expiration of the most favourable portion of the stamp duty break from the previous year.
The data’s source, the Office for National Statistics (ONS), stated that the abrupt increase in the annual rate of price inflation, from 7.8% in June to 15.5% in July, “was mainly due to a base effect from the decreases in prices seen this time last year as a result of changes in the stamp duty holiday.”
The significant increase, according to Jonathan Hopper, chief executive of the company Garrington Property Finders, was “first and foremost a statistical anomaly.”
An increase in one-person homes and higher life expectancy rates are two factors contributing to the rise in demand. The number of people living alone in the UK has surged 4.0% over the last 10 years. The housing stock in both private and public housing in England is significantly overcrowded, with about 1.8 million households listed on local authority housing registers.
The mortgage guarantee program, the stamp duty holiday, and the “race for space,” which saw more individuals opting for larger properties after the switch to working from home, were the main causes of the house price growth that spiked during the COVID epidemic.
The market will stabilize later this year, according to many real estate websites and analysts, but prices aren’t necessarily going to decline as a result.
Rightmove increased its 2022 house price projection from a 5% projected rise to 7% by the end of the year in July due to the market’s resilience. The fact that buyer demand was 26% higher in July than it was at the same time in 2019 was one of the contributing factors.
According to an analysis by real estate portal Zoopla in August, first-time buyers need to earn an additional £12,250 on average to afford a home this year compared to this time last year.
By the end of the year, Zoopla anticipates 1.3 million transaction completions, 100,000 more than anticipated.