Prices are much different than when the pandemic started just two years ago
Average house prices were up by 8.3% in March 2022 compared to the same period last year, as continued high levels of buyer demand put upward pressure on pricing, according to the latest UK House Price Index report from Zoopla.
The price of a UK house climbed by £441 in March, rising to nearly £249,700, and was £29,000 more expensive than when the pandemic started.
House price growth was down slightly from a peak of 8.8% in February and 8.6% in January, but the levels of annual price growth registered over the last three months are the highest since 2007. Total average price growth since the start of the pandemic in March 2020 now stands at 13%.
“The rise in house prices since the beginning of the pandemic, due to the demand-supply imbalance, means millions more properties are now in higher stamp duty brackets. But there are pockets of increased supply emerging, creating more choice for buyers in this busy market,” Gráinne Gilmore, head of research at Zoopla, said.
The levels of annual price growth registered over the last three months are the highest since 2007.
Price growth is not evenly spread across the country though. Some of the most affordable markets are seeing the sharpest growth in house prices, with Wales leading the way, where prices were up 12.1% over the year. Annual price growth in London, the most expensive housing market
in the UK, was the most modest at 3.6%.
By examining the preferred types of properties among first-time buyers, Zoopla’s analysis showed that the first-time buyer home costs around £225,000, up from £197,600 at the start of the pandemic.
This means that the average first-time buyer must find an additional £4,000 for a 15% deposit, and an additional £5,000 in added income every year to meet the criteria of a home loan.
“House prices are still on the rise, along with the cost-of-living, and this is continuing to make purchasing property difficult, particularly for first time buyers. UK adults are already cutting back on small luxuries and treats, such as subscriptions, to be able to offset the rise in the cost-of-living so the thought of saving for a house deposit may feel totally out of reach,” Chris Hutchinson, chief executive of rental platform Canopy, commented.
“For potential buyers, there will be those who see no way out of the renting. While renting can offer flexibility, there will always be those who dream of owning the keys to their own home,” he added.
Meanwhile, Zoopla also reported that the supply of new homes for sale is rising, up a modest 3% on the five-year average, but some areas are seeing significant increases.
The increase in listings in Kensington and Chelsea across all property types, comes amid the return of international demand into the sales market in London, with some buyers seeing value in central London, where prices have risen more modestly than the rest of the country.
The increase in listings, Zoopla pointed out, will provide more choices for buyers, helping to further loosen up housing chains, and could lead to higher numbers of transactions.
However, the property website said it will take some time to ease the significant shortage of stock for sale, which is currently sitting at some 40% below the five-year average.
“While there are signs of a positive turn in the supply of homes for sale, it is unlikely that the total shortage of stock across the UK will unwind this year. This will continue to put a floor under pricing,” Zoopla remarked in its report.
It predicted that house price growth will slow down for the rest of the year, although it will remain in the positive territory.
The Zoopla house price index is a repeat sales-based price index using sold prices, mortgage valuations, and data for agreed sales. The index uses more input data, and is designed to accurately track the change in pricing for UK housing.
