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UK House Price Growth Surges to the Highest Level Since 2004

Discover how average UK house prices have grown, the forecast for the year ahead, and what that means for your mortgage application.

29 April 2022

house prices

We are all conscious that most things are getting more expensive, and housing prices are no exception!

The latest report from the Nationwide House Price Index indicates that property values across the UK have increased to a whopping 14.3% annual growth rate, the highest pace in 18 years.

These metrics could be great news for homeowners, particularly those interested in selling or remortgaging, but less advantageous for first-time buyers trying to get a step up on the property ladder.

This guide will break down those figures into regions, run through average prices, and explain what that means for your mortgage prospects.

Why Are UK House Prices Rising So Sharply?

Property prices have been on an upward trajectory for quite some time.

The annual growth rate skipped from 12.6% in February 2022 to the 14.3% rate we mentioned above in just one month – which could seem troubling if you are concerned about being priced out of the market.

We will talk about forecasts shortly (which might be reassuring), but a lot of this is down to the pandemic.

The temporary pause in property sales led to the market being flooded as estate agents, surveyors and mortgage lenders caught up with the backlog.

Higher demand = higher prices.

It was inevitable that the impact would be a surge in prices to keep pace with competing buyers trying to progress with a house move at the same time.

Interestingly, the trend for detached family homes has persisted, which many economists put down to the misery of months of lockdown in cramped urban areas.

Today’s buyers prioritise living somewhere along the commuter belt rather than in the heart of London, putting further pressure on property markets in East Sussex and Kent.

House Price Statistics in 2022

As a quick summary:

  • Detached homes are worth £68,000 (or 21%) more than in March 2020 when the pandemic began.
  • The average flat or apartment has appreciated by £24,000.
  • Overall, the average property sells for £265,312 (across any region). That compares to £260,320 in February 2022 – a jump of almost £5,000 in a month.

Despite higher prices, mortgages continue to be widely available, with approval levels remaining healthy in February.

Around 71,000 mortgages were approved, which is 10% higher than the post-pandemic figures, so rising prices have not deterred buyers or lenders.

Part of that is attributable to a strong labour market and wage growth, as unemployment levels were down to 3.9% in the quarter to January 2022.

Buyers also tend to have greater savings, owing to a lack of spending during the various lockdowns.

Many have saved a greater deposit and can borrow more or secure a lower mortgage at an affordable monthly repayment.

Regional House Price Growth in London, Sussex and Kent

Think Plutus primarily works with clients in London and the South East, and it is fair to say that nationwide property prices look a little different when we drill down into particular regions.

Given the appetite for smaller towns and villages, London saw the weakest price growth in the country, although that still equates to 7.1% growth in Q1 of 2022, compared to 4.2% in the last quarter of 2021.

In contrast:

  • Greater London and outer metropolitan areas saw growth of 11.4% between January and March 2022, up from 8.8% the previous three months.
  • South East prices have grown 12.8% compared to 11.3% in the quarter before.
  • UK average prices are up by 12.6%, against 10.1% at the end of last year.

The positive is that if you are upscaling your home in London or the South East, mortgages are more accessible than in other areas, and house price growth is less dramatic.

For example, if you are buying in Wales, you will find that property is worth 15.3% more now than a year ago and 14.4% more in the South West.

Are House Prices Forecast to Keep Rising?

Although nobody knows for sure, the housing market will likely begin to slow down in the months ahead, primarily due to living costs and strain on buyers’ budgets.

Inflation is sitting at 7%, and prices for some things, such as food, could rise by 15% per this BBC report.

Just as increased demand resulted in increased prices, tighter expendable income and soaring energy costs mean that property sales are expected to hit a plateau.

However, much depends on how the Bank of England adjusts interest rates and the knock-on effects for mortgage interest charges.

Our advice is to work with an independent, whole-of-market broker to ensure you have clear oversight of the most competitive mortgage offers and the most suitable product to match your finances.

Please get in touch with Think Plutus if you would like tailored support with your property purchase, whether you have found your dream home or would like to understand your potential borrowing options.

Written By

Dave Relfe MCSI DipPFS CertSMP

Dave is the principal mortgage and protection adviser at Think Plutus. He has more than 15 years of experience in financial services and holds the Diploma in Financial Planning from PFS, Investment Advice Diploma from CISI, and the Certificate in Advanced Mortgage Advice from the Society of Mortgage Professionals. He has devised the unique Think Plutus approach that has helped many clients, from first-time buyers to buy-to-let investors and property developers, to people looking to remortgage or release equity from their property. Connect with Dave on LinkedIn.

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