ONS says house prices have risen by 10% with cost of homes on the South West coast increasing most sharply


UK house prices jumped by 10% in the year to November, the Office for National Statistics (ONS) said, despite people facing cost of living pressures.

The BBC reported that demand was particularly high outside of London, with the South West seeing prices rise by 12.9%.

The average UK house price in November was £271,000. That’s £25,000 higher than a year earlier, according to the ONS.

Demand remains high for properties to buy or rent

Advantage has written recently about how 2021 was the busiest year for the housing market since 2006, and as Mortgage Finance Gazette noted, the rental market is also looking strong. They state that: “The rental market mirrored the purchase market: tenant demand grew while landlord instructions fell. (According to the Royal Institution of Chartered Surveyors) a net balance of 57% respondents believe rents will rise both short- and long-term.”

Scope for transaction volumes to edge upwards

Rics chief economist Simon Rubinsohn was quoted by Mortgage Finance Gazette, saying:

Devon“Despite the termination of the stamp duty break at the end of September and the more recent increase in interest rates, the Rics new buyer enquiries indicator remained in positive territory into the year end. Although respondents to the latest survey continue to highlight a lack of stock on the market, they do encouragingly still see some scope for transaction volumes to edge upwards over the coming months.

“More of a concern is the suggestion that the mismatch between demand and supply will drive house prices even higher through the course of 2022. Rents similarly seem likely to be on an upward course over the next twelve months despite broader cost of living challenges emerging on the back of higher energy costs.

“And significantly, the longer-term metrics capturing five-year expectations suggests the industry for now continues to anticipate prices and rents outpacing wage growth beyond the end of this year in the absence of a major uplift in new supply.”

Advantage’s view: After 2021’s record level of housing transactions, we predicted in December that what followed might be “somewhat more gradual, but sustained, house price growth for years to come”. And as demand for properties available for sale or rent continues to outpace supply, it seems likely that house prices will continue to edge upwards, even as the cost of living rises. There has been some speculation that if the Bank of England raises interest rates in a bid to tackle inflation, this will affect mortgage affordability for some and could cool the housing market. However, although there appears to be a real prospect of interest rates being raised over the coming months, they may not be raised substantially enough to dampen the housing market in any meaningful way.

Do you require a structural warranty for your project? The Advantage team is proud to work with clients on developments throughout the UK to ensure that projects are covered by the appropriate structural warranty. To find out more, call: 0845 900 3969 or email: sales@ahci.co.uk

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