Average house prices in the uk reaches a record high in 2021, British property pricing, ONS sales figures
UK House Prices reach Record High
3 Dec 2021
House Prices in the UK reaches a Record High
The average house price climbed by 10.6% between August 2020 and August 2021, according to the Office for National Statistics. According to government estimates, the average price of a property in the United Kingdom increased by £25,000 in a year, bringing the average price to roughly £264,000 in August 2021. If you’ve been considering getting a free home valuation for property in Surrey then contact the estate agents in Surrey as the UK’s average property price has reached an all-time high!
What has been the average growth in house prices in different locations of the UK?
Property prices in Scotland have risen by 16.9% in just one year. The average property price in Scotland is currently at a record high of £180,000. The average property price of houses for sale in Esher and properties in England has climbed by 9.8%, 12.5 percent in Wales, and 9% in Northern Ireland. With a 13.3% annual price increase, North East England has the greatest annual price growth. According to the Office for National Statistics, the average price of property in London has reached a new high of £526,000, the highest recorded figure.
Why is the average house price in the United Kingdom skyrocketing?
There are a variety of explanations for the sharp rise in housing prices in the United Kingdom. The establishment of the stamp duty holiday, for example, provided a significant tax advantage to potential purchasers and homeowners, which was the most significant incentive. Second, several lockdowns and the concept of working from home have resulted in a space race. Finally, an increase in borrowing was possible due to the rising quantity of high loan-to-value mortgages. Let’s take a closer look at these three aspects to gain a better understanding of the price increase.
The competition for space
People in the UK became bored of being cooped up due to multiple lockdowns. They chose to upgrade their homes by moving into larger and better residences because they were compelled to stay indoors. For example, a homeowner who was living in a two-bedroom apartment in the city centre felt that moving to a three-bedroom house in the suburbs would be both cheaper and better. People did not have to worry about their commute because they were no longer going to work, which was another important component in this competition for space. Rather than shopping for homes in the city centre, potential buyers and homeowners choose to relocate to the boroughs and suburbs in order to live in larger spaces. Outdoor space and home offices were in high demand at the time. The average price rose in tandem with the growth in demand for space.
Mortgages with a high loan-to-value ratio are readily available.
Low-deposit mortgages were nearly tough to get by during the pandemic. In fact, banks and lenders tightened their requirements, and only a few people were able to obtain a mortgage. The UK government devised a mortgage guarantee programme. Potential purchasers might get a mortgage with just a 5% deposit under this programme. Individuals’ borrowing expanded dramatically as a result of the mortgage guarantee system. Instead of putting down a 20% down on a £200,000 home, potential buyers can now put down a 5% deposit on a larger property. The growing availability of high loan-to-value mortgages, combined with the battle for space, contributed significantly to the rise in the average price of property in the United Kingdom.
Finally, with a limited supply of new homes on the market, the large gap between supply and demand is supporting the price increase. As people began to hunt for larger homes, demand continued to climb while supply remained relatively stable. According to basic economic theory, if demand rises without a change in supply, the price will rise. And that is precisely what is happening in the United Kingdom now.
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