U.K. Asking Prices Hit Record in the Face of Raging Demand
Double-digit annual increases left the average asking price at £242,832 in May.
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Good news for home sellers across the U.K. in May spelled bad news for buyers as property price gains reached double digits, according to a report Tuesday from Nationwide.
Asking prices swelled 10.9% last month compared to May 2020, the highest level recorded since August 2014. The gains pushed up the average asking price in the country to a record £242,832 (A$442,819), which is £23,930 higher than the same time last year, the bank and mortgage provider said.
The U.K.’s property market spent half of last May shuttered following the arrival of the coronavirus pandemic. In England—Scotland, Wales and Northern Ireland reopened on separate timetables—restrictions on the industry were eased in mid-May, and allowed activity to resume in accordance with government-mandated guidelines.
On a monthly basis, prices rose by 1.8% in May from April, slightly less than the 2.3% jump recorded between March and April, according to Nationwide.
“In the same way as other sectors of the economy, house prices have been driven higher by a supply squeeze as the U.K. comes out of the pandemic,” Tom Bill, head of U.K. residential research at Knight Frank, said in a statement on the report’s findings.
“Add in a stamp duty holiday and the fact pent-up demand has been building for years against the backdrop of Brexit, and the result is a burst of house price inflation,” he continued. “More supply is starting to come online, which will redress the balance. We therefore expect U.K. house price growth will slow down after the summer, declining to 5% by the end of 2021.”
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Ray White’s chief economist outlines her predictions for housing market trends in 2024
2 min
Ray White’s chief economist, Nerida Conisbee says property price growth will continue next year and mortgage holders will need to “survive until 2025” amid expectations of higher interest rates for longer.
Ms Conisbee said strong population growth and a housing supply shortage combatted the impact of rising interest rates in 2023, leading to unusually strong price growth during a rate hiking cycle. The latest CoreLogic data shows home values have increased by more than 10 percent in the year to date in Sydney, Brisbane and Perth. Among the regional markets, price growth has been strongest in regional South Australia with 8.6 percent growth and regional Queensland at 6.9 percent growth.
“As interest rates head close to peak, it is expected that price growth will continue. At this point, housing supply remains extremely low and many people that would be new home buyers are being pushed into the established market,” Ms Conisbee said. “Big jumps in rents are pushing more first home buyers into the market and population growth is continuing to be strong.”
Ms Conisbee said interest rates will be higher for longer due to sticky inflation. “… we are unlikely to see a rate cut until late 2024 or early 2025. This means mortgage holders need to survive until 2025, paying far more on their home loans than they did two years ago.”
Buyers in coastal areas currently have a window of opportunity to take advantage of softer prices, Ms Conisbee said. “Look out for beach house bargains over summer but you need to move quick. In many beachside holiday destinations, we saw a sharp rise in properties for sale and a corresponding fall in prices. This was driven by many pandemic driven holiday home purchases coming back on to the market.”
3 key housing market trends for 2024
Here are three of Ms Conisbee’s predictions for the key housing market trends of 2024.
Luxury apartment market to soar
Ms Conisbee said the types of apartments being built have changed dramatically amid more people choosing to live in apartments longer-term and Australia’s ageing population downsizing. “Demand is increasing for much larger, higher quality, more expensive developments. This has resulted in the most expensive apartments in Australia seeing price increases more than double those of an average priced apartment. This year, fewer apartments being built, growing population and a desire to live in some of Australia’s most sought-after inner urban areas will lead to a boom in luxury apartment demand.”
Homes to become even greener
The rising costs of energy and the health impacts of heat are two new factors driving interest in green homes, Ms Conisbee said. “Having a greener home utilising solar and batteries makes it cheaper to run air conditioning, heaters and pool pumps. We are heading into a particularly hot summer and having homes that are difficult to cool down makes them far more dangerous for the elderly and very young.”
More people living alone
For some time now, long-term social changes such as delayed marriage and an ageing population have led to more people living alone. However, Ms Conisbee points out that the pandemic also showed that many people prefer to live alone for lifestyle reasons. “Shorter term, the pandemic has shown that given the chance, many people prefer to live alone with a record increase in single-person households during the time. This trend may influence housing preferences, with a potential rise in demand for smaller dwellings and properties catering to individuals rather than traditional family units.”
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