House prices are at a new high, and property website Zoopla predict demand will continue to surge well into next year. It comes as buyers want more room after being cooped up indoors during the pandemic.
The average price of a house has risen by 7.3% over the past year, as people search for more space. Prices have reached a new high of £230,700, with houses proving most popular. Not as many people are looking for flats at the moment, but all types of properties are in short supply.
Zoopla say that “demand for houses is twice as high as typically seen at this time of year between 2017 and 2019”. Meanwhile, demand for flats is falling “creating a disparity in average price growth across the two property types”. Over the past year, while house prices surge, the growth in flat prices is falling behind at 1.4%.
However, availability of houses for sale is low, contributing to the push on prices. In comparison to 2020, stock levels have fallen by around 25% in the first half of the year.
The increase in demand for houses began during the first lockdown. All that time at home inside prompted homeowners to reassess their lives and where they want to live. The rise in working from home meant more people wanting a spare room to use as an office. Meanwhile, others felt the need for more garden space.
Pressure on house prices
Head of research at Zoopla, Grainne Gilmore, says “a cohort of buyers has eroded the supply of family houses and put upward pressure on house prices more than flats over the past 12 months”. She expects this trend to continue into 2022.
Even though there are not the stamp duty savings anymore, the market is still seeing high levels of demand.
According to Zoopla, since 2007 the average UK house price has jumped by 30% from the typical £177,300. Year on year, house prices rose 5.4% in June, although demand from buyers dropped by 9% in July as the stamp duty holiday ended. However, this year’s sales still remain 22% ahead of average levels for last year.
The region with the biggest growth in house prices is Wales at 10.2%, followed by the North East at 8.8%. This is due to people moving out of big cities, with the slowest growth of 5.6% in London. Meanwhile, demand for properties in outer London is on the rise, with a 86% increase on 2017-2019 levels.
Scotland had the biggest rise in flat prices at 5.2% and 3.7% in the Midlands, while flat prices fell by 0.5% in London.
However, the property website expects sales in London to improve, “providing there are no further pandemic setbacks”. There is already a bounce back in the rental market. Zoopla also believe “further relaxation on the restrictions around global travel will result in a firmer pick-up in demand”. The firm think this will reverse the downward pricing trend.
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