The Office for National Statistics (ONS) has reported that average house prices in the UK during October 2021 increased by 10.2% in the year to October 2021, down from 12.3% in the year to September 2021.
The average UK house price was £268,000 in October 2021, which is £24,000 higher than this time last year.
Average house prices increased over the year in England to £285,000 (9.8%), in Wales to £203,000 (15.5%), in Scotland to £181,000 (11.3%) and in Northern Ireland to £159,000 (10.7%).
London is the region with the lowest annual growth at 6.2%.
Kevin Roberts, director at Legal & General Mortgage Club, said: “Despite the end of the Stamp Duty holiday, the market seems to show little sign of cooling down. A strong labour market, as well as the prospect of locking into record low mortgage rates, have combined to keep housing activity particularly buoyant. As the Bank of England seeks to keep a lid on resurgent inflation, borrowers may well be tempted to get a foothold on the property ladder before any rate rise comes into effect.
“Whether the current level of house price growth will extend into the new year, is an uncertain matter. Although the labour market remains secure following the end of government support, inflationary pressures, exacerbated by the emergence of the new Omicron variant, may place household budgets under significant strain. Against this ever-changing backdrop, the value of advice remains paramount. Independent and experienced advisers are well-placed to help borrowers navigate a potential knock to their finances, and help customers lock into a deal that is well aligned with their unique needs.”
The average first-time buyer’s home across Britain has increased in price by approaching £9,000 a year for the past decade.
FTBs are now facing an average cost of £225,607, up from £138,973 just a decade ago according to MoveStreets.
That’s a 62 per cent increase meaning that the average first-time buyer has seen the cost of a home increase by £8,663 per year on average since 2011.
Across London, the average first-time buyer now pays £437,511 to get a foot on the ladder, a cost that has increased by £18,134 per year over the last 10 years. First-time buyers in the South East (£12,043) and the East of England (£11,206) have also seen the cost of their first home jump by more than £10,000 a year since 2011.
Even in the North East where property prices have increased at the slowest rate, the average first-time buyer house price has climbed by £3,301 per year over the last decade.
At local authority level, the largest annual increases in the cost of first-time buyer homes have been in Kensington and Chelsea (£38,459), Hackney (£30,845) and Hammersmith and Fulham (£29,648), while outside of the capital Hertsmere (£19,581), Cambridge (£18,309) and Elmbridge (£17,534) have seen some of the largest annual jumps.
Adam Kamani, chief executive of MoveStreets, says: “While we’ve come to expect that property prices are likely to climb due to the government’s failure in providing enough new affordable homes, it really does put it into perspective when looking at how much they’ve increased in the last decade.
“To think that in a single year, the average first-time buyer property will cost a further £8,663 when compared to the previous year is quite amazing and it’s a wonder so many struggle to buy in the current climate.
“Let’s not forget this is only first-time buyer properties we’re talking about here, which should essentially be the most affordable on the market in any given location.”
The average asking price of property coming to market has dropped by an average of 0.7% in December so far compared to last month, the largest monthly fall since January, according to Rightmove.
Strong buyer demand is carrying forward into 2022, with November showing buyer numbers 41% up on election-subdued 2019, and still 3% up on 2020, while fully available stock for sale has hit a new record low this month.
Tomer Aboody, director of property lender MT Finance, commented: “Even with the strongest property market we have seen in over 14 years and values hitting all-time highs, the December dip in asking prices isn’t surprising, and has been the norm over the years.
“Sellers are in an extremely strong position with multiple buyers for nearly every home, which is pushing up prices, but lack of stock is still a huge issue for buyers. Some are ultimately realising that patience is key, hoping the next year will bring more properties to the market.
“While estate agents are enjoying one of their best years in terms of the volume of sales, 2022 is expected to see a return to normality in the market. Prices will still rise, as buyers make the most of cheap mortgage rates but the pace of increase will be slower and lower, which will make for a calmer, less frenzied market.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, added:“The big story for the housing market this year – and the past few months in particular – has been lack of supply.
“We are still registering many more buyers for each available property so don’t expect any significant price correction soon despite concerns about the rapid spread of the Omicron variant and imminent interest rate rises. On the contrary, we believe the new rules on mask wearing and home working will result in release of further pent-up demand as buyers continue to seek more flexible homes reflecting changing working patterns and lifestyles.
“We expect more balance between demand and supply too if our recent significant increase in requests for market appraisals and early January listings are anything to go by.”
The average UK house price hit a new record high of £272,992 in November, says the latest index from Halifax.
This means a monthly change of 1% – the fifth month in a row that house prices have increased – and an annual growth rate of 8.2%.
Halifax also notes that the quarterly change – up by 3.4% – is the highest seen since late 2006.
In Wales specifically, yearly growth totalled 14.8%, leading to the average house price in the country pushing past £200,000 for the first time ever.
And Scotland saw significant yearly growth, too. Here, the average house price went up by 8.5%, putting the average house price at £191,140 – also a newly minted record.
The report states that since March 2020, which it deems the start of the pandemic, house prices have increased by £1,691 a month on average, a total of £33,81 so far.
Halifax managing director Russell Galley believes that a stock shortage is driving the market, with a “strong labour market and keen competition among mortgage providers keeping rates close to historic low.”
He also points out that for first-time buyers, house prices have increased by 9.1% over the year compared to 8.8% for homemovers.
“We see this across different property types too,” he says, “with double-digit annual price inflation for flats (10.8%) over the last year compared to slower gains for detached properties (6.6%).
“This could suggest the ‘race for space’ is becoming less prominent than it was earlier in the pandemic, with industry data also showing the overall number of completed transactions has fallen back since the end of the stamp duty holiday.”
On the subject of flat prices outpacing that of houses, Hargreaves Lansdown personal finance analyst Sarah Coles says: “There are a few forces at play here. The ‘fear of missing out’ plays its part.
She explains: “Once prices start to rise quickly, anyone trying to get onto the property ladder starts to feel that unless they buy soon, prices will rise out of the reach of their deposit. It means they’re asking for help – both from government schemes like the Lifetime ISA and Help to Buy equity loan, and from their families.
“The Bank of Mum and Dad have seen the value of their own home rise, so they’re more comfortable about dipping into the equity in order to find a deposit for their offspring.
“And once they have the deposit in place, rock bottom mortgage deals are a major attraction, because first timers can fix at such low rates that it makes their monthly payments manageable.”
Coles continues: “But it’s not just first timers. Some of these smaller properties are likely to be second homes and buy-to-lets.”
This is a view shared by UK Finance, which just yesterday stated that an increasing amount of equity being withdrawn peaked in June 2021 – at the same time as when house purchasing activity was at its highest.
The peak amount being withdrawn – £106,000 – “together with the timing of this peak, suggest strongly that much of this has indeed been used to fund or part-fund additional property purchases,” UK Finance comments.
Quilter mortgage expert Karen Noye says: “At this stage, two months post stamp duty holiday withdrawal, it was hoped we might finally see a downtick in house prices.
“The still rising prices demonstrates that while the scheme did have an impact on house prices, it was not the only driver. The race for space appears to still be going strong, and when combined with the current demand outweighing supply, prices are still being pushed higher.
“Interest rates will be key over the coming months, and an increase would push mortgage rates up which will likely put potential buyers off. However, the new Omicron variant may have thrown a spanner in the works of any major changes planned by the Bank of England, meaning we are unlikely to see a rate rise just yet.
“While that may be the case, rock bottom mortgage rates are likely to creep up as an interest rate rise is still anticipated, it is just a question of when.
“Those waiting out the housing market boom in hopes of lower prices will likely have to wait a while longer yet.
“Regardless of whether house prices begin to drop, the likely increase in mortgage rates will contribute further towards the unaffordability of homeownership.”
Rents on larger properties are rising at a faster pace than smaller homes, according to the latest housing index from Hamptons.
Rents on four-bedroom properties are showing the strongest growth having increased by 10.6 per cent over the year to October. This gives an average rental cost of £1,949 per calendar month. This is three times the rate of growth seen for one-bedroom properties, where rents have increased just 3.7 per cent year-on-year, to £875 pcm, according to Hamptons’ monthly letting index.
The estate and letting agent said the shift towards working from home as a result of Covid had fuelled demand for more living space and larger properties. As a result the cost of trading up to gain this additional space had substantially increased.
The gap between the monthly rent of a one and two-bed home now stands at its widest point since 2013, when Hamptons starting compiling this index, with the monthly cost of renting a one bed property now equivalent to the cost of renting a two-bed property in 2016.
In total, the cost of trading up from a one-bed to a two-bed rental property has doubled over the last three years. Last month it cost £144 or 16 per cent more to rent a two-bed home, more than double the gap (£68 or 8 per cent) recorded in October 2018.
This equates to an extra £1,728 each year on average in rental payments. The cost of moving from a two-bed to a three-bed has also risen.
London is the costliest region in the country to trade up, both in absolute and percentage terms. Last month the average two-bed in the capital cost £567 or 42 per cent more each month than a one-bed. The North East is the cheapest region to swap a one-bed for a two-bed, where it will cost an extra £102 a month, equivalent to a 20 per cent increase.
Compared to last year, the cost of trading up has risen the most in the East Midlands. Here it cost 12 per cent or £63 more each month to trade a one-bed for a two-bed home than in October 2020. This is because rents on one-bed properties in the region have fallen by 0.2 per cent year-on-year, while two-bed rents have risen by 9.7 per cent.
London is the only region where it’s cheaper to trade up than it was last year. This is because rents on one-bed properties in the capital have risen faster than two-beds. Much of the demand for one-bed homes in London has been driven by younger tenants and pied-à-terre hunters returning to the capital, which in turn has bolstered rents.
Hamptons head of research Aneisha Beveridge says: “The pandemic has marked the first time that we’ve seen such a big divergence in rental growth by property size.
“Usually, rental growth remains fairly uniform no matter how large the home is, but over the last year the gap between rental growth on smaller and larger properties has widened to around 5 per cent. But as more tenants make their return to city centres, many seeking smaller properties, it’s likely that the gap will begin to shrink in the new year.
“There are few signs that rental growth is slowing as the year ends meaning that if growth continues at current rates, we are likely to see rents outside the capital hit £1,000 per month by the middle of next year.
“Rents in London are starting to recover their pre-pandemic momentum which will serve to bump up the headline rental growth figure nationally.”
Stamp duty jumped 67% to £10.2bn in the first half of the tax year, compared to 12 months ago, according to HMRC monthly data.
It said the rise was due to the slump in the property market caused by the pandemic in the first half of last year, followed by the surge sparked by the last July’s launch of the government’s stamp duty holiday.
Last month, stamp duty on property was up a record 76% from October last year, and 25% higher from the same month in 2019.
However, HMRC says: “Comparisons against receipts in the same period last year are not representative as they were heavily impacted by the effects of the Covid-19 pandemic.”
The overall tax take from the Treasury jumped 34% to £392bn in the first half of the current tax year between April and October, with higher receipts from a range of taxes, including the three largest revenue earners – VAT, income tax and national insurance.
The rise reflects more people leaving the government’s furlough scheme and returning to the workforce after the disruption of the pandemic.
Inheritance tax only made up £3.6bn of the tax take, but is a 20% rise on the same period a year earlier.
Hargreaves Lansdown personal finance analyst Sarah Coles says: “The enormous jump in stamp duty this tax year demonstrates the impact of the stamp duty holiday. And while the taxman may be rubbing his hands in glee, buyers are more likely to be wringing theirs.
“Tax is up a third in the first half of the tax year and stamp duty has soared by two thirds. And while the figures are distorted enormously by the impact of the pandemic, the dramatic impact of the stamp duty holiday is clear.
“It’s difficult to compare tax years, because the government brought in a set of rules to try to make it easier to manage tax bills, and another set to get us to spend more money and buy more property.
“However, we can see the enormous impact of the stamp duty holiday. It has pushed the average house price to a record high of £270,000 – up £28,000 in a year, and driven transactions higher. This year we had the busiest ever September in the property market, as buyers rushed for the final stamp duty holiday deadline.
“In terms of stimulating the market and generating tax, the move was clearly effective. However, if you’re trying to get onto the property ladder, or move up it, the impact is likely to be far less welcome.
“As the tax break dies away, buyers now have nothing to gain from the short-term measure, and in the process it has made the challenge of buying a home even harder.”
A majority of parents – 66% – asked by Trussle say they would consider buying a buy-to-let (BTL) near their offspring’s university to help with living costs.
The survey of 2,000 homeowners with children carried out by the broker also reveals that 53% of parents would considering downsizing to help with living costs.
Trussle collected data from Zoopla to show that Newcastle currently offers the highest amount of rental yield from a student property. With an average house price of £192,567 and average monthly rental income of £1,508, this equates to a yield of 9.40%.
And Southampton comes next, with the average house price at £235,911 and monthly income of £1,757 – an 8.94% yield.
“It’s true that BTLs aren’t the bargain that they once were,” says Trussle head of mortgages Miles Robinson.
Robinson mentions changes to tax and the stamp duty surcharge as reasons why BTL is no longer “the king of investments.”
He continues: “However, this new data shows that property is still seen as a safe and reliable way of generating extra income.
“This can be both in the short term, through rent collection and long term gains in house prices. In addition, the low interest climate means would-be landlords can lock-in a competitive BTL mortgage, which are typically interest-only.”
Estate agency says nine of London’s boroughs now have more than 1,000 BTR properties within them as popularity increases among young professionals.
Lettings agents who ignore the growing build-to-rent (BTR) sector are missing a huge opportunity as the sector prepares to triple in size within the capital and beyond, Foxtons has claimed.
The estate agency, which likes to position itself as an early champion of the US-style of renting, says BTR properties are witnessing ‘soaring’ demand as many renters put accommodation quality and services ahead of affordability.
BTR developments are more expensive to rent in than traditional lets around them, the agency’s own research shows, including a 9.1% average premium for one-bed flats and an 11.3% premium for two-beds.
“Part of the BTR premium can be attributed to their new, or nearly new, condition,” says Sarah Tonkinson, MD of its BTR arm.
“It is also worth noting that premiums may look higher than the reality. Rent-free periods are sometimes used to entice renters at the beginning or end of a BTR tenancy, yet are not calculated in the average rent.”
The data and claims outlined above are within Foxtons’ latest London Lettings Report, which reveals that 8% of its long-lets this year have been within BTR developments, up from 2.2% four years ago.
“While BTR in the UK still only accounts for 1% of the private rental market, it has huge potential and is a sector Foxtons has supported for a number of years,” adds Tonkinson.
The report also reveals that demand for rented property in central London is ramping up again after falling off a cliff during Covid as many younger renters returned to their hometowns.
In Zone 1 registrations are up by 101% year-on-year and up by 72% in Zone 2. But although rents are still lower than pre-pandemic times, a lack of stock means rents are now rising by up to 7% in central postcodes as demand outstrips supply.
More than half of tenants would be willing to pay more in rent in order to live in a greener home, new research has revealed.
The survey, by LettingaProperty.com, found that 98% of renters would prefer to live in an energy-efficient home and 52% would be willing to pay an extra 10% in order to do so.
A third of renters (33%) would accept a 5% rent increase, while 8% would
be willing to pay an extra 20% if it meant they could rent a greener home.
The vast majority of renters (85%) were happy to consider a so-called “green lease”, which includes clauses designed to ensure the tenant and landlord work together to improve the home’s energy efficiency, while reducing costs and environmental impact.
Already, 95% of renters expect their property to have double glazing and 92% expect it to have loft or wall insulation.
Furthermore, 92% expect recycling bins and 73% expect LED lightbulbs, 56% expect smart meters and 38% expect smart thermostats.
On top of this, 50% of renters expect dual flush toilets, while 26% expect solar panels and ground source heating.
LettingaProperty.com founder Jonathan Daines says: “We’ve heard a lot recently about the cost to landlords of making their properties greener, from replacing gas boilers with heat pumps to installing insulation.
“This survey has revealed that tenants are prepared to play their part too, with over half of renters happy to pay more for greener homes.
“It is overwhelmingly clear that tenants are demanding greener choices than the rental sector currently offers.
“Clearly, renters know what they want when it comes to green credentials. And while many landlords can’t afford solar panels or heat pumps, smaller eco improvements can help properties stand out and increase renter appeal.
“Landlords should be mindful of this sentiment and take any steps they can to make their properties greener.”
Average rents in England fell by almost 9% from £1,104 per month in September to £1,006 in October, although year on year, rents were around 7% higher, according to the latest index from Goodlord.
The company says that void periods have also started to increase, but that demand remains very high in comparison to 2020 figures.
The South West saw the biggest decrease in the cost of rent, recording a 16% reduction.
This was followed by a 14% fall in the South East and 11% in the North West.
Greater London, the North East, East Midlands and West Midlands recorded reductions of between 4-6%.
However, these decreases followed a string of higher than average rental prices between July and September.
The October average remains higher than figures recorded for May and June 2021.
In addition, year-on-year rental prices are 7.2% higher than 2020 averages.
Voids hit the highest levels recorded since May, rising to an average of 19 days during October.
This is up from September’s average of 17 days.
There was a big shift in the North East where, after 4 months of historically low voids, numbers returned to more predictable levels.
The region recorded an average void period of 20 days in October, up from 11 the previous month.
The East Midlands, Greater London, and the South West also recorded a rise in void periods.
The South West held steady month-on-month at 17 days.
The North West, however, saw a drop in voids from 25 days to 18 days, and the West Midlands also saw a decrease; 21 days down to 19.
Year-on-year, voids are currently 17% lower than 2020 averages.
Goodlord chief operating officer Tom Mundy says: “We’ve witnessed huge market demand in 2021 so far and I’m not surprised that void periods are still lower than those recorded in 2020 and that average rents are much higher too.
“We’ve definitely seen a slight cooling of demand this month, as is to be expected following the summer surge from renters and early autumn demand from students.
“But this cooling should be taken with a pinch of salt as the year-on-year figures clearly show that the lettings sector is continuing to experience consistently high demand across England.”