UK average house prices increased by 8.9% over the year to April, down from 9.9% in March, according to the latest UK House Price Index from the ONS and the Land Registry. This is the first time UK house price growth has slowed since July 2020. Average house prices increased by 8.9% in England, 15.6% in Wales, 6.3% in Scotland, and 6.0% in Northern Ireland. On a seasonally adjusted basis, average house prices in the UK decreased by 2.2% between March and April following an increase of 2.0% in the previous month. The North East was the region with the highest annual house price growth, with average prices increasing by 16.9% in the year to April, up from 14.2% in March. London continues to be the region with the lowest annual growth (3.3%) for the fifth consecutive month.
8.9% house price growth in the year to April results from causes including the temporary stamp duty reduction, low interest rates, lockdown-led upsizing and a flight to safer investments. All of these factors and more are driving demand, and yet construction is getting harder and more expensive, and the supply of existing stock is constrained. This rise in house prices is, in many ways, hardly remarkable. It is a continuation of a long-term trend: house prices rising faster than most people’s wages, making ‘affordable home ownership’ for younger and less well-off people a work of fiction, unless underpinned by government support. The cultural shift is that, while ‘boomers’ still see home ownership as a reflection and determinant of success, younger people don’t all want or need to ‘get on the property ladder’. Yes, it would be nice, but the higher priority is quality, affordable housing, not ownership. With this in mind, it is a great time for investors who are serious not just about making money, but about providing good quality housing for their tenants: demand is growing. It is also a great time for policy makers to consider what measures will facilitate affordable rental housing for all - not just new build, prime high rise flats, but family homes, both new and existing.