Annual House Price Growth Exceeds the National Average Salary

Over the course of the past 12 months, the average market value of a home in the UK increased by just under 11%. This was the fastest rate of growth recorded in 15 years, taking average UK house prices to a new record high of £278,123 in February.

Data published by Halifax, suggests that on average, UK homeowners saw an extra £27,215 added to the value of their properties between February 2021 and February 2022. According to the Office for National Statistics, the average annual salary during the same period of time was £25,971.

This suggests that UK homeowners made more from their homes during this time than from their jobs, a trend many experts predict will continue indefinitely.

“This was an eighth successive month of house price growth, as the resilience that has typified the market throughout the pandemic shows little sign of easing. Lack of supply continues to underpin rising house prices, with recent industry surveys showing a dearth of new properties being listed, now a long-term trend,” said Halifax managing director Russell Galley.

“This may be a particular issue at the larger end of the property market. In the past year, the average price of detached properties has risen at a rate more than four times that of flats in cash terms.”

“Looking ahead, as COVID moves into an endemic phase and almost all domestic restrictions are removed, geopolitical events expose the UK to new sources of uncertainty.”

A good time to own your own home

Increasingly, prospective first-time buyers are finding themselves being priced out of the UK property market in its entirety. On a more positive note, those who already own their own homes are making an unprecedented windfall.

“There’s arguably never been a better time to be a homeowner as, despite all that’s been thrown at it, the UK property market continues to go from strength to strength,” said Marc von Grundherr, director of Benham and Reeves.

“This performance really is quite alarming when you consider the wider economic turmoil that we’ve faced for some years now, and it proves that there really is no safer investment than bricks and mortar.”

“Even across London, where market conditions have remained far more muted, values have continued to climb, and the capital’s property market is now poised to enjoy an accelerated rate of growth over the coming year.”

Attention turns back to the capital

While London recorded the slowest average property price growth over the period (5.4%), this is still the region’s best performance in almost two years.

“If 2021 was defined by a race for space and people moving out to the suburbs, 2022 is seeing… house hunters rushing back into the capital,” commented Guy Gittins, chief executive of agents Chestertons.

Meanwhile, Nationwide highlighted the potential complications on the horizon attributed to the escalating conflict in Ukraine.

“The continued buoyancy of the housing market is little surprising, given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5% in January, and since borrowing costs have started to move up from all-time lows in recent months,” commented Nationwide.

“The squeeze on household incomes is set to intensify, with inflation expected to rise above 7% in the coming months,”

“Indeed, there is scope for inflation to rise even further as events in Ukraine threaten to send global energy prices even higher.”

“Assuming that labour market conditions remain strong, the Bank of England is also likely to raise interest rates, which will exert a further drag on the market if this feeds through to mortgage rates.”