Insufficient supply still keeps the UK house prices high
The UK house prices see minor changes following the pandemic-led property boom, but the insufficient supply keeps house prices high.
Property supply and stock are dramatically low right now: property specialists at home.co.uk and the recent market analysis suggest current property stock levels are at an all-time low.
According to the experts, the current stock levels will keep prices from falling, not to mention the lowered mortgage rates chasing the decreasing stock.
Compared to October 2021, home prices fell slightly by 0.4% in November, thereby challenging many valuations after the pandemic-led property boom.
Regional property market performance
As for the regions, the South West, the North East, and the South East saw the most notable drops in asking house prices with a 1.2%, 1.0%, and 0.8% accordingly. Changing prices in the South West and the South East were anticipated because of the rising home values. But falls in the North East appeared out of place given house prices increasing only slightly over the last year there.
Perhaps the excessive stimulus has altered the UK real estate market recently. The stock levels are unprecedentedly low right now, while house prices jumped dramatically during the wider economy struggling with the crisis.
Moreover, the rental property market has likewise been affected recently. Rental stock levels are 46% lower than in November 2020, meaning rising rents moving forward.
London property market performance
London rental market is a case in point. The supply is no longer excessive: current stock levels are down by 54% compared to last year figures. It is little surprise that rents in London are skyrocketing. Areas such as Kensington and Chelsea and Tower Hamlets lead the race with annual rises in rents of up to 38%, covering the costs of lockdowns.
In turn, growth in rents and profits in Central London boosts the demand in the sales property market. Market specialists expect London to attract international and local investors again – prices are high, and capital gains are anticipated.
However, it is unclear whether the market will see growth in the real term as well. Heated property market activity resulted in property stock levels falling by 22% since November 2020, while the supply likewise dropped significantly.
Extra property insights and forecasts 2022
In most UK regions, insufficient supply drives home prices and rents up. However, growth rates in locations such as Scotland and Greater London are below the inflation rates. East England and East Midlands remain the frontrunners in terms of the regional price growth: prices are up by 11.2% and 9.9% over a year accordingly, and the demand and supply are unbalanced.
Property experts at home.co.uk expect rising home prices and rents to remain thanks to the recent credit expansion. Near-term significant changes in supply are not on the cards, while low mortgage rates are likely to stay as well.