London house prices grew at an annual rate of 7.4% in the first quarter of 2022 as the city looks to attract homebuyers again
James Morley, Business Development Director at Cornerstone Tax, discusses the increase in UK house prices
The supply and demand levels in the UK property market remain unbalanced, with demand continuing to exceed the available supply of properties. Despite energy prices soaring for millions of households in the UK, it does not seem to have done much to affect the market’s buoyancy as London’s house prices saw an annual rate increase of 7.4%, up from 4.8% in the same period last year – the highest rate since 2016. Adding to this, the average asking price of a London property has increased by an annual rate of more than 6%. James Morley, Business Development Director at Cornerstone Tax, believes that the acute level of supply and demand imbalance has been one of the primary causal factors for hiked bidding wars on properties within the capital.
At the start of March 2020, the average London home cost £493,626, but prices have soared by £41,351 – an 8.4% increase since then. The average house price in the capital now stands at £534,977 with some of London’s more central boroughs experiencing a steady comeback, driven by professionals returning to the office and seeking a home nearby. Homebuyers have looked to take advantage of mortgage rates that remain a record low, despite the Bank of England raising interest rates at their previous three meetings, with the South West of England being the UK’s strongest performing region for annual house price growth – standing at 14.6% and representing the highest increase since September 2004. Indicating that the demand for bigger properties in less crowded regions that began during the pandemic remains.
An increase in supply in the UK property market will inevitably slow down the rise of UK house prices, however, with more than double the amount of buyers to sellers currently active in the market, it’s unknown how quickly balance between supply and demand will be achieved.
James Morley, Business Development Director at Cornerstone Tax discusses the increase in UK house prices:
“Over the past couple of years we have seen a substantial increase in UK house prices. Factors such as the stamp duty holiday have caused more people to consider buying property. However, due to the increase in average house prices, it has made it more difficult than ever for buyers to purchase their first property.
“There is hope that more available properties will enter the UK housing market – thus causing a more manageable supply and demand level and subsequently halting the rapid rise of property prices. I think homeowners will look to take advantage of the record house prices and look to maximise the prices they can get if they sell their property, causing an increase in supply for the UK property market.
“A solution to the global supply issues will cause an increased supply of new builds, providing the UK housing market with some much-needed extra stock, which should subsequently decrease the average UK house prices, but there are many obstacles facing the UK housing market now which has caused a lot of uncertainty.”