House prices are rising at their fastest rate recorded since March 2004 and are continuing the ascend to new record levels. This makes house prices around a fifth higher than they were at the start of the pandemic.
According to Nationwide, prices have risen by 14.3% in the year to March. This means that it is the strongest pace of increase since November 2004 when the UK experienced a housing boom that preceded the financial crisis.
The price of an average UK home reached £265,312, meaning it is now more than £33,000 higher than in March 2021. House prices have soared throughout the UK, with the housing prices in Wales increasing by 15%.
Meanwhile, detached properties have increased by nearly £68,000 since the onset of the pandemic, with average flat prices up £24,000.
Looking for a quick answer? Use the menu below to jump straight in:
- Is The Pandemic To Blame For The High House Prices?
- Wages Are Falling And House Prices Are Rising
- What Does The Data Show?
- Will House Prices Drop In 2022?
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Is The Pandemic To Blame For The High House Prices?
During the pandemic borrowing costs remained low as buyers were rushing to take advantage of the stamp duty tax breaks, meaning the demand for housing grew. Adding to this was the limited stock of homes on the market which kept an upward pressure on prices.
Prices have increased and are now 21% higher than they were before the pandemic struck in early 2020.
However, as the cost-of-living crisis weighs on people’s budgets and consumer confidence drops, the demand for housing may soon cool off.
Wages Are Falling And House Prices Are Rising
The Office for Budget Responsibility (OBR) is an independent body that makes economic forecasts for the government. In October last year, they predicted that house prices would fall in 2022.
Last week the OBR said that people in the UK were facing the biggest drop in living standards on record as wages fail to keep up with rising prices.
According to the Office for National Statistics (ONS), house prices last year in England and Wales outstripped wage growth by more than 90%. This statistic has prompted talk of a possible full-blown “affordability crisis”.
The ONS said that in 91% of local authority districts house prices grew faster than earnings in 2021. It had added that furthermore that a house in England typically costs an average of 9.1 times earnings. This was up from 7.9 earnings in 2020. In 1997, this figure was at about 3.5.
What Does This Mean?
It means that simply put housing prices are soaring whilst wages are falling. According to the ONS, over the last year, housing affordability has worsened in 300 of 331 local authority areas. In England, the average property prices increased by 14% whilst average earnings fell by nearly 1%.
With prices rising at their fastest rate in 30 years, the cost of the living crisis is squeezing households across the UK.
The Bank of England has raised interest rates three times in four months in an effort to combat price inflation however as a result of this, mortgage costs are rising.
Nationwide has said that these factors have not slowed down the acceleration in house price growth.
What Has Caused Prices To Be At An All-Time High?
There are many factors behind the recent surge in prices, such as robust demand, limited supply, and a strong jobs market.
Karen Noye, a mortgage expert at Quilter, said that the war in Ukraine may also have a knock-on effect on buyer demand.
She went on to say that “Energy prices were already soaring prior to the conflict but with Europe now looking to find alternative energy sources from outside Russia, costs are likely to go even higher.”
What Does the data show?
According to Nationwide, these are the annual price increase and average house prices across the UK for the first annual quarter.
| Location | Price | Increase |
| Wales | £201,502 | 15.3% |
| South West | £300,936 | 14.4% |
| East Anglia | £277,332 | 14.2% |
| Yorkshire and the Humber | £199,235 | 13.5% |
| East Midlands | £227,275 | 13.5% |
| Outer South East (includes Ashford, Basingstoke, and Deane, Bedford, Braintree, Brighton and Hove, Canterbury, Colchester, Dover, Hastings, Lewes, Fareham, Isle of Wight, Maldon, Milton Keynes, New Forest, Oxford, Portsmouth, Southampton, Swale, Tendring, Thanet, Uttlesford, Winchester, Worthing) | £337,094 | 12.8% |
| North West | £204,511 | 12.4% |
| Scotland | £178,289 | 12.0% |
| West Midlands | £233,136 | 11.7% |
| Outer Metropolitan (includes St Albans, Stevenage, Watford, Luton, Maidstone, Reading, Rochford, Rushmoor, Sevenoaks, Slough, Southend-on-Sea, Elmbridge, Epsom and Ewell, Guildford, Mole Valley, Reigate & Banstead, Runnymede, Spelthorne, Waverley, Woking, Tunbridge Wells, Windsor and Maidenhead, Wokingham) | £422,428 | 11.4% |
| Northern Ireland | £171,095 | 11.1% |
| North East | £153,029 | 10.6% |
| London | £518,333 | 7.4% |
The data shows that throughout the UK prices are increasing. Wales has gained the biggest price increase at 15.3% whilst areas like London have the lowest price increase at 7.4%.
Will House Prices Drop in 2022?
Whilst areas such as the East Midlands, the North East, Scotland, Yorkshire and the Humber saw the price of houses over the last two months surpass levels seen in 2017 – 2020, analysts at Zoopla say that the new year surge in buyer demand is starting to cool off.
Whilst it is only starting to cool off at a relatively slow rate, and there are good signs for future stock levels, it is worth noting that Zoopla predicts that prices will begin to fall during the remainder of 2022 and will end at an average of 3.5% in December 2022.
The analysts at Zoopla say that economic headwinds, such as the increasing cost of living and rising mortgage rates, will start to slow down the growth of house prices. They go on to say that global uncertainty, such as the invasion of Ukraine, will have economic impacts that will be felt across the UK and around the world.
This sums up everything you need to know about the recent house price growth. If you have any questions, queries, or any insight into housing prices, please don’t hesitate to get in touch!
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Alexandra is a junior content producer who enjoys writing articles and finding out more about the property market. Read more about Alexandra here.
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