UK Properties Experience Biggest Cash Gains in 40 Years
UK property prices are on an upward trajectory and increasing at their fastest rate since 2007. According to Halifax, the typical UK property is reporting its biggest annual capital gain since the index began more than 40 years ago.
Despite the challenges of a post-Covid world, the momentum from the last two years continues to sustain the UK property market. Property prices have increased as a result of soaring demand and remain buoyant even with rising interest rates and increasing costs of living.
It’s expected that the property market will continue defying expectations, especially after a 0.5% increase in prices in February alone. Last month, UK property prices rose at a rate of £370 per week, putting annual growth at 10.8% – the highest figure since June 2007.
To put this into context, the value of the average home has risen by £38,000 in two years, the majority of which has been added in the last 12 months. Since March 2021, the typical property has increased by over £27,000, pushing the average house price to yet another record-breaking high.
The average UK house price is now topping £278,123 after the ‘biggest one-year cash rise recorded in over 39 years’, a Halifax spokesperson has commented.
While it was expected that the recent squeeze on many UK households would have immediate impacts on the property market, this is yet to materialise. In fact, rising interest rates and inflation seem to have only spurred buyers on through fear of missing out further down the line.
As a result, the perfect storm of supply and demand remains. The UK’s ‘race for space’ – buyers looking to relocate somewhere with more open space – continues to far surpass the nation’s limited supply of property. This has been a key incentive for both tenants and buyers over the past two years and it shows no sign of subsiding.
The buoyancy of the UK property market is only enticing more investors. With rising property prices and the reassurance of a resilient investment asset, there is now more potential for capital growth in the long-term.
Not only are there now more opportunities for bigger long-term returns, the strength of the UK rental market is also allowing for short-term gains. After a bumper year, UK rents are rising at a 13-year high, bolstered by a similar storm of supply and demand.
Latest reports have put demand at 76%, which in turn, has pushed rents by 8.3% in recent months. As a result, the average UK rent is just shy of £1,000 per calendar month. When combined with the opportunities for long-term growth, it’s no surprise that more investors are looking to the UK property market.
Although the majority of locations across the UK are forecasting promising growth, certain areas are set to perform better than others. As well as the ‘race for space’, more professional workers are returning to city centres. With the likes of Birmingham and Derby set to see price increases of up to 24.5% over the next five years, along with 12% rental growth, these city centre locations are becoming some of the best places to invest in 2022.
