A new report from the Office of National Statistics (ONS) shows that house prices increased by 2.2% in the year to December 2019.
The official report (available to read here) explains that although the past three years have seen a gradual reduction in growth, that trend has been reversed since July 2019 and it represents the first time since the beginning of 2018 that every part of the country has seen concurrent growth.
The ONS reports that the average house price in the UK is £235,000. If you do the sums, that means the average homeowner has seen the value of their property increase by over £5000.
These figures are particularly interesting because December is usually a quiet time of year in the property sector. It’s the time when most people are thinking about Christmas, not buying or selling their property, so it suggests a particularly robust growth.
Those wanting to know what might be behind this promising trend needn’t look too far. Interest rates in the UK are really great for buyers at the moment. With the base rate at 0.75% we are seeing some near-record-low mortgage rates.
We’re seeing increased demand because of favourable market conditions, but we also have a shortage of housing stock in some areas which is also causing the price of property to go up.
“What we’re seeing here is largely down to demand outstripping supply, ” explains Petty Real company director, “there’s only so many houses available, and since we have more and more people wanting to purchase, it’s a vendors market at the moment.”
Looking forward into the next 12 months, most economists predict the bank of England will keep interest rates the same or even lower the base rate further. When you consider that prediction in the light of the Government’s report on housebuilding from the final quarter of 2019 (available here) a pattern emerges. This document states that the rate of new builds has actually decreased in the second half of 2019 and looks set to continue.