In the UK, home rates are steadily rising due to increasing needs and a persistent property shortage. As per Nationwide, the typical property price in the UK rose by 12.6% to £260,771 for the year to Q1 2022, a dramatic escalation from the 6.3% gain in the prior year. In actuality, it was the biggest increase in housing prices since 2004. Inflation-adjusted house prices increased 6.3% in Q1 2022 compared to Q1 2021.
Property rates per region
The overall home price across all other areas increased from the previous year by 4.8% to £518,333 in Q1 2022, with London experiencing the lowest growth at 7.4%. Rates in London are currently roughly 70% higher than 2007 highs. Following are the increase in rates of different regions in the UK:
- Whales: 15.3%.
- Southwest: 14.4%.
- East Angelia: 14.2%.
- Yorkshire and Humberside: 13.5%.
- East Midlands: 13.5%.
- Outer Southeast: 12.8%.
- Scotland: 12%.
- Northern Ireland: 11.1%.
- North West 12.4%.
Factors influencing the rates
Over the past ten years, four factors have driven up housing prices in the UK, especially in London:
- Still-weak manufacturing activity;
- the rapid expansion of the City of London;
- Interest rates are at historic lows, and “financial easing” has greatly increased the monetary supply;
- Rapid growth rate and immigration, notably in London.
The rise in property demand
Following an 11.2% drop the year before, domestic real estate sales in the UK increased by roughly 41.2% in 2021 to about 1,475,740. Sales in Northern Ireland increased significantly by 49.2% year over year to 34,180, in comparison to a 16.5% fall in 2020.
Wales saw a strong increase in sales, up 42.6% to 64,160, after 2020 saw a fall of 18.6%. Lastly, compared to 2020, domestic real estate sales in England increased by 42.2% to a total of 1,263,000.
Shortage in house supply
After being adversely impacted by the government’s Covid-19 lockout restrictions in 2020, the UK’s home development activity is growing rapidly once more. Construction of new residences increased dramatically, to reach a target of 300,000 per year. Nevertheless, despite the improvement, it is still well behind its aim. Additionally, due to planning restrictions, the UK’s per-person housing construction rate, which is still low by global standards, did not adequately adjust to the boom’s soaring housing costs.
The gap between London’s and other regions’ rates
Despite ongoing housing price declines in the nation’s capital, the margin between London and the remainder of the UK is gradually closing. The difference between the typical home value in London and the typical home value anywhere else in the UK is enormous in Q1 2022, although it is at its lowest level since Q3 2013. The typical price difference is £276,178.
The discrepancy in house values between London and elsewhere in the UK reached its highest point in the first quarter of 2017, with an estimated price gap of £290,140.
Help-to-buy property scheme
The state offers purchasers the Help-to-Buy Capital Loan. It allows them to borrow up to 20% of the whole transaction cost as long as they put down 5% of the original cost as a guarantee and obtain a mortgage for the rest 75%. The home must be owned exclusively by the house buyer and cannot be sublet.
The state recently proposed an updated program with stricter loan standards that would operate from April 2021 through March 2023. The new program will be limited to first-time purchasers, in contrast to the present one, which stipulates that a purchaser cannot have previously bought a house in the UK or overseas. The new program will also contain local housing market limitations to make sure that those who deserve it most get assistance. Regional real estate rates caps under the proposed plan:
| Region | Property price limit for loan |
| South-East | £437,600 |
| South-West | £349,000 |
| West Midlands | £255,600 |
| East Midlands | £261,900 |
| North-West | £224,400 |
| North-East | £186,100 |
| Yorkshire | £228,100 |
| London | £600,000 |
