UK property price growth setting new records

It’s probably not surprising that property price growth is setting new records to those that have been watching the UK property market recently. Whilst there has been quite a lot written about price growth tailing off or flattening (and we’ve certainly found that plausible) it simply hasn’t materialised as of yet.

There are any number of factors at play here, and we can discuss scenarios such as the current cost of living crisis for potentially pushing prices up, as well as the situation in Ukraine, the fuel price crisis or Brexit, however, it now seems quite settled amongst commentators and analysts that UK property prices are continuing to be driven by post-pandemic factors.

We know, for example, that during and immediately after the pandemic and the lifting of lock down measures that many people were looking to move to find extra space, or to make the move they’d been considering into city centres.

We also know that government incentives, including the stamp duty holiday and Help To Buy have had their influence in driving up demand and prices. Furthermore, there has been quite a distinct lack of supply to meet this demand, creating something of a perfect storm. So, will it last?

UK property price growth

In a piece analysing the current situation for Money Week, John Stepek noted that whilst many expected the UK property price growth to be temporary, it appears to be sticking around.

Wondering why that might be, Stepek says “There’s actually a logical answer for all this, even if it’s not the one you want to hear. It boils down to two things: employment and interest rates.

Houses are an unusual asset in that buyers are almost entirely price-insensitive – or rather, they are insensitive to the “headline price” of a house.

How do most people buy a home? They buy it with a mortgage – with debt. So what’s the “real” price of a house? Is it the price in the estate agent’s window? No – it’s the monthly payment that will secure the house for you.”

Stepek goes on to say that whilst cost of living rises and other inflationary pressures may not exactly be good for a government staring down the barrel of an election within 2 years, it won’t have a marked effect on the housing market unless it affects people’s ability to borrow or repay mortgages.

As if to cement this analysis, the BBC are reporting this week that new records are being set by property price growth. In an article this week the BBC quote Halifax analysts. “The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on households’ finances,” said Russell Galley, managing director of Halifax.

“Although there is some recent evidence of more homes coming on to the market, the fundamental issue remains that too many buyers are chasing too few properties.”

Investing in UK property

All this may well lead you to ask, is now a good time to invest in the UK property market? And the answer probably won’t shock you in that it’s a massive ‘yes’.

There are many reasons to believe that UK price growth may slow over the next 12 months, but ultimately, as noted by the analysts above, the fundamental market conditions driving it aren’t going to change significantly any time soon.

Supply simply does not meet demand. It’s the same in the rental market, too, meaning that for buy-to-let investors, there isn’t really any reason to look anywhere other than the UK buy-to-let market right now for security, growth and income.

If you’re looking to invest in buy-to-let property, get in touch with us today!