Rightmove Reports £354,564 Average UK Property Price
Property prices have been increasing at an unseasonably high rate, and according to Rightmove, the average UK property price is now reaching £354,564 – the highest figure ever recorded by the company.
This all-time high comes after another 1.7% increase in March, which equates to a £5,760 increase on February’s average. Not only has this pushed the annual rate of growth to 10.4%, but this increase was the biggest monthly rise in over 18 years, highlighting the opportunities in the UK property market.
With the exception of London and Scotland, all regions across the UK have contributed to this price growth. Averaging more than 10% price increases per region, the country’s chronic undersupply of property continues to be the key driver behind the UK’s continued rise in property prices.
Early March is usually a quieter period for the property market, with the following months typically busier as homeowners look to move in time for the summer. However, in comparison to March 2019 (pre-pandemic), sellers are now twice as likely to find a buyer for their property in the first week of listing.
UK Interest Rates Reach Pre-Covid Level
During the height of the pandemic, UK interest rates dropped to a record low of 0.1%. In an attempt to encourage consumer spending, this decrease not only minimised the economic impact of Covid, but it also sustained the UK property market.
However, since the economy has recovered, the Bank of England has been pushing UK interest rates. While the first increase came at the end of 2021 to 0.25% – the first rise in two years – interest rates have since returned to pre-Covid levels.
On 17 March 2022, the Bank of England announced another 0.50% increase, taking the UK interest rate to 0.75%. With interest rates now at their highest level since March 2020, will this deter investors from the UK market?
Despite these increases, buy-to-let investors shouldn’t be heavily affected by the recent changes in interest rates. For those on fixed mortgages, there won’t be any changes to their buy-to-let property and for those with a variable mortgage, the changes will only be incremental, at around £12 a month per £100,000.
Want to know more about the UK property market for 2022? Download the UK Investment Guide today and discover everything you need to know about UK property investment in the new year. In this guide you’ll find:
- Current market performance
- Forecasts for the UK property market in 2022
- Key trends impacting the market
- Best places to invest in 2022
Is London Facing a Market Correction?
The London property market has always been in a league of its own, but recent reports have suggested that prices in the capital could be facing downward pressure in the coming months. According to S&P Global Ratings, the London property market is overvalued by up to 50%.
By comparing long-term average property prices and income data, this subsidiary of S&P Global is anticipating a market correction. Alastar Bigley, a researcher at the agency, has suggested that falls in property prices are looming, following consistent growth throughout the pandemic.
He says: “A combination of low rates, the Stamp Duty holiday and excess savings amid the pandemic have driven property prices higher, particularly in London and the South East, where overvaluation relative to income over the long-term is as much as 50%. We expect a greater correction in property prices in an overvalued market.”
With growing uncertainty throughout the London property market, alternative locations are set to become more attractive to buy-to-let investors. Birmingham and Derby have long been profitable investment locations, and with up to 24.5% price increases forecasted in the next five years, they’re only going to draw more investors away from the capital.
UK Rental Market is the World’s Fourth Largest
The UK property market has long been a ‘safe haven’ amongst both domestic and international investors. As a result, the UK rental market is now the world’s fourth largest by total volumes of privately rented properties.
According to Octane Capital, the United States, Japan and Germany are the only countries that have bigger rental markets than the UK. This research analysed the size of the private rental market across OECD nations based on the number of dwellings, the proportion of these attributed to private rentals and what this equates to in terms of the total number of rental homes in each market.
Within the current UK property market, there are around 29.5 million homes – 8.7 million of which are privately rented. On the other hand, the United States is far surpassing the UK, with 47 million privately rented homes across the country. Germany follows closely behind with 20 million and Japan ranks third with 8.7 million privately rented homes.
Over the last two years in particular, the buy-to-let sector has become increasingly attractive to investors, and with the UK rental market now ranking amongst some of the biggest countries in the world, this is just a testament to its potential.