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Industry reaction: House prices rising by nearly 12% a year, says Land Registry

Extraordinary rises particularly outside London will simmer down next year as normality returns to market, helped by a potential rise in interest rates.

Nigel Lewis

rics report

House price growth has continued to defy economic gravity with an extraordinary annual rise of 11.8%.

The UK House Price Index for September puts the average property value at £269,945, after a 2.5% rise since August.

Growth was strongest in the North West where prices increased by 16.8% in the year to September while London saw the smallest rise, with prices up by 2.8% in the same period. HM Land Registry figures show an estimated 160,950 transactions of residential properties worth at least £40,000 in September – 68.4% higher than a year ago.

Lucy Pendleton, James Pendleton, imageIndustry experts believe these trends have only a limited time to run, with regions, in particular, likely to feel the absence of the stamp duty holiday into next year, according to Lucy Pendleton (pictured), co-founder of independent London agency James Pendleton.

“The market in the capital is already showing signs of strengthening once again and an early indication of that is the red-hot rental market which is taking everyone by surprise,” she says.

Readjustment

tom bill knight frankIn the longer term, there will need to be a readjustment as mortgage rates normalise, a process that has been delayed by the pandemic, says Tom Bill (pictured), head of UK residential research at Knight Frank.

“Interest rates were 0.75% in early 2020 before Covid struck and we wouldn’t expect any meaningful impact on prices or demand while they remain below that level.

“However, what’s different between now and early 2020 is the higher cost of living, which may cause demand to start fraying around the edges depending on how elastic the definition of ‘transitory’ becomes in relation to inflation.”

Post-COP 26, environmental factors could impact on prices, according to Stuart Law, CEO of the Assetz group, who reports that during the last year, the average price of new builds has gone up 14% while the value of older properties has only risen by 5.5%.

stuart law assetz“We expect this gap to continue to grow,” says Law (pictured). “With increased focus on the energy efficiency of our homes, the value of newer-build houses – which are more likely to be better insulated and equipped with solar panels and ground or air source heat pumps – is likely to increase.”

November 18, 2021

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