It seems incredible to still be talking about growing house prices following a pandemic and a recession, but it doesn’t appear to be the case that price growth is slowing even slightly.
There was some suspicion that the ending of the government’s stamp duty holiday, which is due soon, may put the breaks on this growth somewhat, but so far there’s very little indication of it happening.
It’s been a difficult year, and it has to be said that 2020 was an incredibly strong year for UK property even though the majority of the country were under some level of restrictions for much of that time.
Logic would dictate that with such heavy restrictions being in place that activity would come to a bit of a standstill, and any drop in activity that translated into a drop in prices would likely have been met with a knowing nod rather than concern or panic.
The picture that emerged was decidedly different, however, and in reality, the property market actually spent very little time shut down, with estate agents allowed to open in May 2020 and subsequently considered essential, meaning that they weren’t forced to close again.
For any number of reasons investors are flooding into property right now, and certainly, the rental market has also exploded, so what level of growth are we looking at?
Price rises
New ONS figures, reported in Property Wire, showed a huge jump year-on-year.
The article said ‘The average price of a home in the UK continues to rise, with the latest figures from the Office for National Statistics showing an increase in the year leading up to March of 10.2 per cent.
With the average price of a home now at a record high of £256,000, the ONS said that the figures for March showed the highest annual growth since August 2007. In the twelve months between March 2020 and March 2021, the average house price went up £24,000.’
Considering the context of the previous two years, it’s quite incredible that such a level of demand is persisting, and certainly there are many now looking to move into new properties.
Investors and landlords
This price rise is, of course, excellent news for anybody holding UK property as an asset as its overall value is shooting up, however, it also speaks of a trend that benefits landlords indirectly in that the demand for property overall also remains extremely strong.
We can see from a range of figures across the UK that property yields, and demand for rental properties, are growing quickly too and so this means a triple whammy, if you like, of capital appreciation, higher yields, and increased rental income.
Property in the UK has now regularly performed far better than expectations, and so it’s probably wise to assume that this trend will continue at least into 2022. With that in mind it’s worth considering that the rise in demand isn’t just from renters but also from landlords who are looking to expand portfolios, and so if you want to beat the rush it might be worth looking to invest now.
