House prices: Expert discusses 'interesting' pricing differences
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According to the Rightmove House Pricing Index released on Monday, the average price of a UK home surged by £19,082 over the past three months, reaching £360,101. Price rise momentum is now even greater than it was when the Stamp Duty holiday was in force during the coronavirus pandemic, which spurred the market on considerably.
It’s a dark state of affairs for prospective buyers, many of whom are being forced to consider paying well over the odds for homes, or scrapping their search altogether.
The severe rise in house prices is being spurred on by a catastrophic shortage of homes, sparking a frenzy of buyers competing for a historically low number of homes.
All of this comes in the face of three back-to-back interest rises by the Bank of England and a squeeze on household finances thanks to tax rises and high inflation.
The shortage is now being interpreted as the largest driver of skyrocketing house prices. So how did we get here, and when will it finally end?
Why is there a shortage of homes?
The UK has been suffering from a chronic lack of homes in recent years – but this has been severely exacerbated by the end of coronavirus pandemic restrictions.
Materials to build new homes have become scarce due to global supply chain issues – and increased demand leads to increased costs.
Materials like bagged cement, insulation, kitchen carcassing, and roofing and landscaping products have all gone up in price by around 10 to 15 percent – timber has gone up by approximately 50 percent.
All of this is underpinned by a dramatic reduction in council house building since the 1980s and the interaction between the sale of council homes through Right to Buy and Buy to Let schemes, with not enough new homes built to accommodate Britain’s growing population.
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When will the shortage end?
Unfortunately, housing experts are not hopeful about a quick end to the UK’s housing woes.
Chris Waine, director at Hive Projects told Express.co.uk: “I don’t see any indication of an end to the housing shortage and a decrease in house prices in the short term.
“All of the current market trends show increasing demand, especially for family housing and significant price increases, especially in key Northern Powerhouse locations such as Liverpool (circa 10 percent in the last year) and Leeds (circa eight percent in the last year).
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“Some of this will relate to the pandemic and the pent-up customer demand and changing lifestyles, such as working from home and the desire for external space, so I would expect some levelling off over the next 12 months, but with a continued desire for home ownership and new housing provision not at a level that will address this imbalance, I can’t see a major shift any time soon.
“Increasing housing expenditure due to the likes of the energy crisis will undoubtedly put more pressure on the consumer and their appetite to invest, but again, I think the severe lack of housing supply and apparently unwavering demand will prop up the market and maintain house price levels for some time yet.”
Sean Keyes, managing director at Sutcliffe, told Express.co.uk: “We have different regional problems throughout the country, with London for example experiencing different housing issues to some areas up North.
“Areas which are heavily populated are bound to have an increased heavy demand too and in these areas in particular, prices will continue to stay high.”
Mr Keyes said the issue comes down to a lack of house building, with the Government not reaching its targets.
He continued: “As a nation, we simply aren’t building enough houses at the moment, with the UK’s 300,000 a year target currently only reaching 66 percent of this benchmark.
“The driver currently for more housing is smaller dwellings, with many smaller families and single people looking to get onto the property ladder now, and because of this, I don’t see us catching up with the demand in my lifetime; and with the population growing exponentially, house prices are sure to fluctuate year on year depending on the economy and need.”
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