Key statistics

Now and then

Across all areas of the UK demand for property continues to outpace available supply, with asking prices hitting new record highs for the third month in succession. However, the housing market is undoubtedly set to reach a crossroads in the coming months as household budgets face increased pressure and economic headwinds escalate.

70 years’ service 

The UK’s longest-running house price index, produced by the Nationwide, commenced in the same year the Queen ascended to the throne. At that time the average price of a property was just shy of £2,000; adjusting for inflation that’s the equivalent of around £60,000 today. All the national house price indices agree that the average price of a UK property is now more than £250,000. Back then the base rate of interest was 4%; today it’s just 1%, although the cost of home ownership compared to average earnings has increased significantly. The 1951 Census indicates there were just over 13 million households in England and Wales, with most of the population (65%) living in private rented accommodation. Today the figures have flipped: 65% of the estimated 26 million households in England and Wales are owner occupiers. The official 2021 Census household figures will be released by the Office for National Statistics later this month. 

A chink in the armour 

Month-on-month and year-on-year price growth continues. However, although Nationwide report prices rose 11.2% in the year to May, the 10th consecutive month of price growth, year-on-year this represents a slight slowdown from the 12.1% recorded in the year to April. Since mid-April, Zoopla report there has been a slight uptick in properties selling with a price reduction of 5% of more. The time taken to sell a property has edged upwards from 16 days in March to 18 days in April (Zoopla). 

Mortgage approvals, an indicator of future borrowing and thus a good lead indicator of housing market activity, also dipped in April. The Bank of England report 66,000 mortgages were approved, a 5% fall on March and marginally lower than the pre-pandemic April average (2016-2019). The effective interest rate, the actual interest rate paid on newly-drawn mortgages, increased by 9 base points to 1.82%, and the rate on outstanding mortgages increased to 2.05%. With the additional rise in the base rate to 1% in May yet to filter through, it is likely these will creep upwards in future months. However, the average mortgage rate on fixed-rate 2- and 5-year 95% loan-to-value (LTV) deals remains lower than a year ago and any market moderation is anticipated to be gradual. A consensus of forecasts still predicts price growth of more than 5% across the mainstream markets over the course of 2022.

Crunching the numbers 

Over £14 billion was collected in residential stamp duty receipts across England and Wales in the year to March 2022, up 18% on the pre-pandemic year April 2019-March 2020 (HMRC, StatsWales). More than 33,000 sales priced £1 million or more took place in the year to March 2022, up 68% on the pre-pandemic year. While property price growth will have pushed sales into higher tax brackets, it is clear that interest in the prime markets continues. These markets are forecast to outperform the mainstream markets over the next five years as wealthier buyers are, in the main, less impacted by interest rate rises and the cost-of-living crisis. At 7.4%, annual price growth in the prime markets of England and Wales has risen to its strongest level of growth since September and the premium price threshold for a prime market property has broken the £800,000 barrier. 

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