House prices rise 7.6% to record high: UK HPI

Essex Home Finance
UK average house prices increased by 7.6% over the year to November 2020, up from 5.9% in October to stand at a record high of £250,000.
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UK average house prices increased by 7.6% over the year to November 2020, up from 5.9% in October to stand at a record high of £250,000, according to the latest UK House Price Index from the ONS and the Land Registry.

This is the highest annual growth rate the UK has seen since June 2016.

Average house prices increased over the year by 7.6% in England, 7.0% in Wales, 8.6% in Scotland, and 2.4% in Northern Ireland.

The North East is now the final English region to surpass its pre-economic downturn average house price peak of July 2007.

London and Yorkshire and The Humber were the English regions with the joint highest annual house price growth, with average prices increasing by 9.7%.

The lowest annual growth was in the East of England, where average prices increased by 4.8% over the year.

London’s average house prices remain the most expensive of any region in the UK at an average of £514,000. This is a record high and the first time London’s average house prices have surpassed £500,000.

Anna Clare Harper, chief executive of asset manager SPI Capital, commented:“The UK HPI data for November shows a more complete picture than other house price indices. This is important, because news of house price growth both reflects and also influences buying decisions.

“In 2020, property decisions were underpinned by an understandable fear of missing out: on the temporary stamp duty reduction, on the chance to improve living conditions, and on future house price gains.

“This is reflected in the latest data. Specifically, house prices grew by 7.6% overall, led by Yorkshire and the Humber and London at 9.7% each. Within this, detached homes grew the most, by 8.5%, followed closely by terraced and then semi–detached properties.

“It’s important to point out that this growth was based on fewer transactions than in the previous year. Partly this was because fewer first-time buyers purchased their own homes, constrained by uncertainty in the jobs market, affordability constraints and a desire for flexibility.

“So what does this mean for the housing market? Firstly, rental demand is growing, because although fewer people are buying their own home, we all still need a roof over our heads. Secondly, for developers or homeowners planning to sell a property, it may be harder to find a buyer over the coming months, especially with the end of the temporary SDLT reduction looming.

“The good news going forward for property owners – whether investors or homeowners – is that property tends to hold its value well throughout market cycles, in particular compared with the volatility of the stock market (which has experienced 7 x more ‘crashes’ than the housing market since the turn of the century, in 2000, 2001, 2007, 2008, 2011, 2016, 2020), or even racier choices such as cryptocurrencies, which experience such volatility on a daily basis.”

Kevin Roberts, director of Legal & General Mortgage Club, added: “The latest ONS house price index figures will be welcomed by existing homeowners. The resilience of the housing market continues to shine through as people remain encouraged to move house with or without the benefit from the stamp duty relief, no doubt also encouraged by the rollout of the a Covid-19 vaccine.

“There remain challenges however and the Government’s decision to extend the furlough scheme until the end of March will be welcomed by many homeowners exploring their options. At Legal & General Mortgage Club, we saw searches for furlough friendly mortgages increase by 230% in November 2020, when compared to the previous month.”

Original Article from Financial Reporter 20/01/2021

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