‘There’s never been a better time to be a homeowner’ as house prices continue to shoot up

According to Nationwide, February saw an increase in property prices but it is likely that they will slow down later in the year due to the Ukraine crisis fuelling inflation and triggering further interest rate rises. It was the seventh consecutive monthly rise and, astonishingly, prices are now 20% — or GBP441,138 — higher than they were prior to the pandemic in Feb 2020. Nationwide’s chief economist Robert Gardner said: “The average home price rose above GBP260,000 in February for the first time, an increase in GBP29,162 in the past 12 months. This is the largest annual cash increase since 1991, when we started our monthly index. “The buoyancy of the housing markets is not surprising given the increasing pressure on household budgets by rising inflation, which reached a 30-year peak of 5.5% in January and since borrowing costs started moving up from all-time lows recently,” Gardner said. He also stated that it was likely that the housing market would slow down in the coming months due to the squeeze on household incomes, with inflation expected to reach seven percent. There is potential for inflation to rise further as the events in Ukraine could push global energy prices higher. Assuming that the labour market remains strong, the Bank of England will likely raise interest rates. This will further drag the market if it feeds into mortgage rates. “Housing affordability is already more difficult, partly because house price growth has outpaced earnings growth by a large margin since the pandemic. The average home’s price is now 6.7 times the average earnings, up from 5.8 in 2018. “Tom Bill, head UK residential research at Knight Frank said that “I don’t expect a return of more muted house prices until supply picks up and there have been signs of that gradually happening.” “While demand has not been slowing over the past several months, higher market valuations requested from prospective sellers since the beginning of the year indicate that supply will increase, especially as the spring market arrives. Therefore, we expect price growth to return back to single digits in the second half of this year. READ MORELondon house prices: Boomerang buyers push property prices up at the fastest rate since before Brexit voteThe London areas where house prices have risen most since the first Covid lockdownLondon house prices now stand at a record GBP521,000 on average — but growth lags behind rest of UK READ MORELondon house price boomerang buyers push property prices higher at the fastest rate since before Brexit voteThe London area where house prices have risen the most since the first Covid lockdownLondon’s average house price is now GBP521,000, but growth is slower than rest of UK. This is alarming considering the wider economic turmoil we’ve been through for many years. It proves that bricks and mortar are a safer investment than any other. “Even in London, where market conditions are much more difficult, values have continued rising and the capital’s real estate market is poised for an accelerated rate growth over the next year.”