The average price of a home in the UK hit L278,123 (US$364,758) during February.
Home Prices in UK Hit New High in February
According to a just released report from the UK mortgage lender Halifax, UK home prices hit a new high of L278,123 (US$364,758) in February, the fastest pace of home price growth since 2007.
This new February high of L278,123 or US$364,758 represents a month-over-month uptick of +0.5% and a year-over-year price increase of +10.8%.
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Russell Galley, managing director of Halifax said, “The UK housing market shrugged off a slightly slower start to the (new) year with average property prices rising by another +0.5% in February…this was an eighth successive month of house-price growth, as the resilience which has typified the market throughout the pandemic shows little sign of easing.”
Average property values have increased +16% since February 2020.
Galley continued. “Over the last 12 months alone, house prices have gained on average L27,215 (an approximate conversion to $35,750). This is the biggest one-year cash rise recorded in over 39 years of index history.
Regional Home Price Increases
- Wales – +13.8% y/y
- Northern Ireland – +13.1% y/y
- Scotland – +9.2% y/y
- England’s South West region +13.4% y/y
- London – +5.4%y/y
Outer London Luxury Prices Increased +3.2% to Hit Strongest Gains Since 2016
London’s prime luxury home market saw average sale prices rise +3.2% y/y in 2021. According to Knight Frank, this uptick of +3.2% in home prices in London’s outer boroughs was the strongest rate of growth since February 2016.
According to Tom Bill, head of UK residential research with Knight Frank, this +3.2% price growth reflects robust buyer demand for space and greenery.
Prime central London luxury prices rose +1.3% y/y in 2021. However, Bill anticipates luxury home prices in the city center to rise at “a more notable upswing” when international travel resumes.
Inventory and Affordability Issues Persist
Galley said, “Lack of supply continues to underpin rising house prices, with recent industry surveys showing a dearth of new properties being listed, now a long-term trend.”
According to Halifax’s Galley, it’s unclear how geopolitical events will affect the UK’s housing market. Galley said, “The war in Ukraine is a human tragedy, but is also likely to have effects on confidence, trade and global supply chains. Surging oil and gas prices are one immediate consequence, meaning that inflation in the UK – already at a 30-year peak – will remain higher for longer.”
Increased oil and gas prices will likely squeeze already stretched household incomes. Additionally, interest rate increases in the UK are all but inevitable.
Galley said, “These (and other) factors are likely to weigh on buyer demand as the year progresses, with market activity likely to return to more normal levels and an easing of home price growth to be expected.”
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