The UK housing market has seen its strongest start to the year since 2004 with the average cost of a house 11.2 per cent higher than last year.
The average price of a UK property has jumped to £255,556, up by 0.8 per cent compared to last month, according to the Nationwide House Price Index. This time last year costs had risen by just 1.9 per cent year-on-year with the average property costing under £216,000 in January 2021.
Robert Gardner, the chief economist at Nationwide, said, “housing demand has remained robust. Mortgage approvals for house purchase have continued to run slightly above prepandemic levels, despite the surge in activity in 2021 as a result of the stamp duty holiday, which encouraged buyers to bring forward their transactions to avoid additional tax.”
“At the same time, the stock of homes on estate agents’ books has remained extremely low, which is contributing to the continued robust pace of house price growth,” he continued.
Despite spiralling prices 2021 saw the highest level of housing market transactions since before the financial crash in 2007 with more than 1.4m properties sold. The number of sales was up 25 per cent compared to 2019, before the pandemic struck.
Nationwide analysts predicted that growth will slow this year with inflation at 5.4 per cent, dampening consumer confidence.
“While the outlook remains uncertain, it is likely that the housing market will slow this year,” Gardner said, noting that house price growth has outstripped earnings growth by “a wide margin” since the pandemic struck.
“A 10 per cent deposit on a typical first-time buyer home is now equivalent to 56 per cent of total gross annual earnings, a record high. Similarly, a typical mortgage payment as a share of take-home pay is now above the long run average, despite mortgage rates remaining close to all time lows,” he continued.