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UK House Price Index: Average house price growth slows.

UK House Price Index: Average house price growth slows.

With one in 16 privately owned homes changing hands this year, is the house price bubble about to burst? We take a look at Zoopla’s latest House Price Index Report and summarise the latest property market data and the projected market for 2022.

The average UK house price is up by 6.9 compared to the previous 12 months, with the pace of growth starting to ease and looking likely to continue along this path. Zoopla predicts that the average house price in the UK during 2022 will be set at +3%.

The easing of house price growth will not be linear, and the British real estate company expects the rate of growth to change month by month throughout the year. The change in pace comes at the end of the busiest housing market since 2007, as current buyer demand is 28% higher than the past five-year average. So, why is this happening, and what does it mean for landlords?

Supply vs Demand

Although there is still residual buyer demand following the pandemic flurry, the pace of growth in house prices has been underpinned by the continued lack of supply of housing stock. Zoopla notes - “total supply of homes is 42% below the five-year average, just above the five-year average of +1.2% annual growth”, with the new supply of homes being listed for sale at 5-10% under the average levels of 2017-2019.

This gets more interesting when you break down house and flat prices separately. The supply of houses for sale is down 55% compared to levels from the past five years. This increasingly high demand for houses is a clear knock-on effect from the pandemic and lockdowns and continues the trends we have seen of people moving out of cities and into more rural areas, now that offices are more open and adapted to remote working.

Flats and apartments reflect the same pattern of low stock, but only down by a more modest 15% in comparison, so Landlords looking to make further long-term buy to let investments may well find that flats are the most available option at the moment. As well as the relatively low stock, landlords may find the current value of flats more palatable, with the average price growth up by just 1.6%, vs the price growth for houses at 8.3%.

The Zoopla House Price Index notes that for all types of houses, detached and terraced, house price growth is currently running at almost double the five-year average of 4.2%. The ongoing demand for more living space, outdoor space, and an area to work from home continues to fuel a high-level demand for larger houses, and subsequently, a low level of supply.

Regional Growth Differences

Zoopla notes how the relocation from “commuter zones” to the more rural areas has affected London. The capital’s housing market has been the most impacted due to the frequent lockdowns, and as a result, the average price growth is registering at just +2.3%. In contrast, Wales reports the highest rates of growth, at +10.8%, displaying the damage that has been done to house prices in London. However, for the brave, long-term property investor, this may prove an opportunity to invest in the capital before house price growth levels return to their previous levels.

If you are looking to take advantage of the slow in-house price growth, or simply to chat through the current market opportunities, our team of expert brokers will be more than happy to answer questions and advise the best mortgage solutions for your property investments. Give us a call on 0345 345 6788, or email enquiry@mortgagesforbusiness.co.uk.

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE