Demand for space expected to drive UK house prices higher

UK house prices

Estate agent Hamptons also predicted that more homes will be sold in 2021 than in any year since 2007

A second wave of demand for more space will keep driving house prices across Great Britain higher, with values set to rise by up to 3.5% a year between 2022 and 2024, a forecast claims.

The estate agent Hamptons also predicted that more homes will be sold in 2021 than in any year since 2007, after a record surge in activity this year as families sought larger homes after the pandemic.

Hamptons believes that summer 2021 marked peak house price growth, and expects growth to slow over the next few months, so that this year would end with average prices in Great Britain 4.5% higher than at the end of 2020.

However, one of the factors widely credited with contributing to the stronger-than-expected price growth during the pandemic, a race for space that has seen many buyers prioritising properties with bigger gardens and more room for working from home, could be set to continue for some time.

According to official house price figures and data from some commentators, the market had cooled after the partial end of the stamp duty holiday in England and Northern Ireland this summer.

Latest data from the Office for National Statistics (ONS) show that the average UK house price dropped by £10,000 in July compared with a month earlier, though its figures showed that annual price growth was still running at 8%. Many homebuyers had rushed to complete their purchases before a key stamp duty holiday deadline on 30 June, and official data showed that sales tumbled by almost two-thirds in July.

However, some more recent data has suggested that the market is continuing to boom, even though the threshold at which stamp duty begins returns to its pre-pandemic level of £125,000 on 1 October.

Halifax said this month that the average cost of a property increased by 0.7% in August; its rival lender Nationwide put the monthly rise in August at 2.1%, the second-highest in 15 years.

Flexible and remote working and other Covid-induced changes mean households will move home more often than during pre-pandemic times, according to Hamptons. It is forecasting price growth for Great Britain of 3.5% in 2022, 3% in 2023 and then 2.5% in 2024. That would mean a rise of 13.5% between the start of 2021 and the end of 2024.

The estate agency predicts that north-east England would be the top performer over the period, with property values notching up a rise of 6.5% this year and then between 4% and 6% a year between 2022 and 2024.

By contrast, London was set to underperform the rest of the country over the next couple of years, with prices forecast to rise by 1.5% this year and 1% in 2022, said Hamptons.

Several surveys have found that stretched affordability and the rise of flexible working have prompted many households to quit the capital or consider doing so.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Getting Money Wise. The information provided on Getting Money Wise is intended for informational purposes only. Getting Money Wise is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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