Price growth across the UK is at its strongest level in over 13 years as the roadmap to ‘normality’ continues.
A year ago the housing market was closed for business. Few would have predicted then the current state of play. Mortgage lending and property sales hit record highs in March, as too the average price of a newly marketed property. That record was broken again in April, with the average asking price now just over £333,500. The time taken to secure a buyer has fallen to just 45 days, the quickest Rightmove has ever recorded. Although sales and mortgage approvals fell slightly in April, they remain significantly higher than the longer-term average and the impetus to move continues.
Demand outpaces supply
Annual price growth across the UK is at its strongest since August 2007 (UKHPI), the more affordable northern regions surging ahead of their southern counterparts. Demand continues to outpace supply; new supply is 30% lower compared to 2017–2019 (Hometrack). This imbalance could well start to ease over the coming weeks, as many focus on enjoying the relaxation of restrictions, but the months ahead look set to remain busy. Family homes (3+ bedrooms) remain highly sought-after. Demand for extra space continues, whether from first-time buyers or upsizers, with business announcements cementing blended working and flexible commuting as the long-term ‘norm’ for many.
Consumer confidence has risen to its highest level since the country entered lockdown over a year ago (GfK) and business confidence is high (IHS Markit). The annual rate of UK inflation rose sharply from 0.7% in March to 1.5% in April as restrictions eased and consumers started spending across the economy. The Bank of England forecasts economic growth of 7.25% over the course of 2021, the strongest in over 70 years.
As with the sales market, a shortage of new supply and increasing demand (RICS) is helping support rental prices. New instructions in the first quarter are 9% lower year-on-year (TwentyCi). Rental values are significantly higher across all regions of the UK, except London, than at this time last year. Excluding London, the average monthly rent for new tenancies is £853, up 6.2% (HomeLet). The London market remains oversupplied in many areas, values here 5.7% lower year-on-year. Across the UK, average prices were 2.9% higher in the year to April, on par with the projections of 3% price growth in 2021
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