The UK housing market recorded its strongest month in a decade and half in January according to Nationwide. Annual price growth hit 11.2% with the average price of home reaching a record and mouth-watering £255,556. In February alone, the average price rose by £7,785, driven by a shortage of homes being put up for sale and a change in trends as workers returned to offices (Rightmove, 2022). Homebuilders have continued to benefit from low interest rates and other government policies such as the Help to Buy scheme. However, rising living costs from the increased prices in energy, fuel and food, means that growth is likely to steady this year from the highs of the previous year. With recent events in Ukraine adding to some concerns especially in the stock markets, there is certainly reason to approach the housing market, whether buying or selling, with more caution and having flexibility in adapting to market conditions. The rental market could be a more prudent option for developers, building on the robust growth shown in 2021 (ONS, 2022).
The 1990s to 2020
- House prices have, on average, risen year on year since the late 1990s.
- Between 1997 and 2020, the median cost of a property in England surged 315%: average employee salaries, however, only rose by 87%.
- In 1997, the average price was 3.54 times that of an average wage: in 2020, figures of around 8 times the average salary are considered normal
(ONS, 2020). In some areas today, the average property is 11 times that of the average wage.
The current data
- Halifax have predicted a 1% market growth this year: in 2021, the market grew by 8-10% fuelled by COVID-19, low supply, the stamp duty holiday, home working and people seeking further outdoor space.
- Rightmove have predicted a return to normal in growth in 2022. Significantly, due to high demand and a shortage of supply, most analysts do not predict a drop in the market.
- Most analysts also agree that governments have learned lessons from the recession in the ‘90s with the housing market central to a stable economy.
- Britain’s largest house builder, Persimmon, believe that increasing material and labour costs will be passed on to the consumer. House prices will continue to rise due to demand exceeding supply, low interest rates and the steady levels of mortgage availability backed by government guarantees.
With fears mounting regarding inflation and the potential of further interest rate rises from the Bank of England, it will be interesting to monitor any changes in consumer confidence and see if the housing market can remain as resilient as it was during the pandemic. With the days longer and the warmer March weather, this is traditionally a suitable time to buy. Comparatively low mortgage rates are still available and competition in the market should ensure that they continue to do so in 2022. Unless you are investing in the stock market or selling a property, there is still reason to remain positive when investing in property especially buy to let or commercial avenues.
Do you need some advice?
Are you considering developing your property? Are you converting a loft, adding an extension, or looking for energy-saving improvements? Read our article Planning and Budgeting to get some sound advice in ensuring that your new project not only starts on a strong footing, but also provides the best possible chance of meeting deadlines and staying within budget.
Working with a professional company like Haggar Construction can support you with building developments, whether you are rebuilding a property or buying a property to let.
We pride ourselves on delivering smart, sustainable solutions for our clients’ construction projects, giving each project the time and focus it deserves and ensuring the highest quality outcomes. We are a family-run business with a huge amount of experience in the construction industry, working on large and small scale projects, but always with the highest level of commitment and professionalism.
We seek to add value to your project with our expert knowledge, forward-thinking approach and transparent service. If you are looking for a hands-on team to help you with the utilities for your construction project, please do not hesitate to get in touch and one of our friendly team will be happy to help.