What is going to happen to UK house prices

August, 2022

If you are planning to buy or sell a house, you will be interested to know what is likely to happen to house prices and whether now is a good time to sell or not.

Whether you already own your own property or are a first-time buyer, an adjustment in house prices can be beneficial.

A drop in price in the area you wish to buy in can save you money, whereas a rise in your current property’s value means you can secure a good price and have more capital to invest in your next purchase.

House prices are determined by several factors, including:

Overall health of the economy.

The unemployment rate and wage growth both play a part in consumer confidence, which impacts how confident people are to move and how much they are willing to pay.

Interest rates

The Bank of England sets the base interest rate level. If it is relatively low, people can afford to spend more on property as the cost of borrowing is lower. This tends to push house prices up. Conversely, once rates start going up, mortgages become more expensive and house prices fall as fewer people opt to move.

Supply and demand

Local house prices will be determined by how desirable a particular location is and how many similar properties are available. If, for example, a new housing development is completed, this can reduce the value of properties nearby as there is greater competition for buyers. Conversely, some properties will always command a premium because they are in a sough after area.

What has been happening to house prices?

There are several respected sources of data relating to house prices, including monthly indices that provide information on house price changes over the previous month and over the preceding 12 months.

The UK House Price Index

This is the most accurate index as ituses house sales data from HM Land Registry, Registers of Scotland, and Land and Property Services Northern Ireland and is calculated by the Office for National Statistics. The index applies a statistical method, called a hedonic regression model, to the various sources of data on property price and attributes to produce estimates of the change in house prices each period.

The House Price Index (UK banks)

These indices are often calculated based on their own data of mortgage approvals.

Rightmove & Zoopla House Price Index

Unlike other indices that are based on mortgage approvals and completed sales but takes an average of asking prices for properties listed on their websites. This is a good reflection of seller’s confidence but doesn’t clearly demonstrate how many of those properties end up going under offer at a much lower price or don’t end up selling at all.

What is driving the change in house prices?

The housing market has been tumultuous over the past 2 years, with the pandemic having a direct impact on house prices. Initially, there was a slump as the country entered into lockdown for the first time in March 2020 before a massive resurgence from June 2020, when society began opening again. A key driver was the introduction of a stamp duty holiday on the 8th July 2020, which offered buyers a saving of up to £15,000 on their tax bill when purchasing a house. This acted as a stimulus, ironically driving house prices up by an average of £15,409 between June and November 2020, according to figures from the Halifax, in effect wiping out the stamp duty saving.

With house prices at elevated levels, we could see them starting to trend downwards over the coming months, which, if you are a first-time buyer or moving into a new area, could save you money if you do decide to wait. If, however, you are a mover and have to sell your current property, it may pay to make the most of the tail-end of this recent house boom.

Anecdotally, estate agents are reporting that there are still significant numbers of people looking to move, with demand outstripping supply. This means buyers are having to remain quick-thinking and decisive when house-hunting.

How do I know what my property is worth?

While it is useful to consider the broader market trends in the UK, it is also important to work out what is happening in your local area if you are planning to buy or sell. There can be a great deal of variation in the price of a house on one street compared to the same style of house in another street, so it pays to do your homework.

  1. Online valuation tools can give you a rough idea based on other local properties, however, it does not take into consideration an extension or conversions you have made to your property. Click here to do an online instant valuation.
  2. Land registry can give you sold prices for properties in your local area. This gives a good indication of what properties are selling for, compared with the asking prices that have are being marketed at.
  3. Estate agents will be able to give you a good idea of what similar properties are going for and what you are likely to get for yours.

Thinking of selling your home?

If you are thinking of selling your home or you are interested to know what your home is worth, please feel free to call us on 0121 430 4448 or email enquiries@hshomesofsolihull.co.uk.


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