While the country was watching the Spring Statement, and hot on the heals of Monday’s HMRC transactions report, The Office for National Statistics sneaked out the latest figures for house price inflation. It showed a not surprising, but officially confirmed national figure of 9.6% growth in house prices across the entire UK for the past year, to January – a tad down on last month.
The ONS noted a couple of caveats owing to more historical transactions data feeding in, so the headline figure might be adjusted later: “Because of the impact of the coronavirus (COVID-19) pandemic on both the number and supply of housing transactions, we might see larger revisions to the published UK House Price Index (HPI) estimates than usual.”
Here are the main points:
- UK average house prices increased by 9.6% over the year to January 2022, down from 10.0% in December 2021.
- The average UK house price was £274,000 in January 2022, which is £24,000 higher than this time last year.
- Average house prices increased over the year; in England to £292,000 (9.4%), in Wales to £206,000 (13.9%), in Scotland to £183,000 (10.8%) and in Northern Ireland to £159,000 (7.9%).
- London continues to be the region with the lowest annual growth at 2.2%.
Andy Sommerville, Director at Search Acumen: “Historically, January is a slower month for house price growth as people pause and take stock of their finances at the start of a New Year. However, this year, the market continued to defy expectations and house prices climbed 9.6% in the first month of the year.
“The increase in property prices across the UK can be attributed to the gap in demand and levels of stock in the market. The solid momentum in prices has put homeowners looking to move in a strong position to sell for a premium, while first time buyers will have to lower expectations, or continue saving in the current market.
“As we look ahead to the Spring, we can expect to see a wave of newly listed properties to the market, which could contribute to the easing of house price growth. Added to this will be the further pinch to household spending, with energy bills set to rise from April coupled with elevated fuel and food costs. We can expect to see a consequent dampening of activity that will subdue the rise in house prices that we are currently experiencing.”
Jeremy Leaf, north London estate agent, former RICS residential chairman: “On the ground, existing homeowners whose purchasing power has been buoyed by savings and equity, still remain keen to find homes which fit their post-Covid lifestyle. Affordability is more of a factor for those buying for the first time so will have some impact on prices.”
Lawrence Bowles, Director of Research, Savills: the average home increased in value by more than £24,000. By way of context, median annual earnings were £31,285 in 2021. This means that the increase in value of the average home was 77% of total average gross earnings.
“The contrast is even starker in the East of England and South East. There, demand for larger family homes in greener, commuter locations has driven house price growth higher. The average home in both regions increased in value by more than £35,000 last year. In both cases, that growth is around 10% greater than average earnings for the region.
“London, the North East, and Yorkshire, on the other hand, saw house prices increase by less than annual earnings.
“Rapid house price growth and rising interest rates are creating a perfect storm for first-time buyers. Additionally, with Help to Buy due to end just a year from now, we expect the housing market to become increasingly polarised between those whose parents can afford to help them onto the housing ladder and those who can’t.”
Mark Harris, CEO, SPF Private Clients: “The housing market continues to perform strongly with house prices continuing to rise, due to lack of stock. Those buyers who didn’t make their move last year are still keen to do so, assuming they can find the right property, and take advantage of mortgage rates while they remain low.”
Read the full report here.