Both house prices and rental costs in the UK have been rising in the recent years, dictated by economic growth, employment and access to credit. Between 1992 and 2020, the Halifax house prices index grew from 100 points to almost 437 points, meaning that house prices quadrupled. In fact, house price growth has surged in the second half of the year fueled by a spike in buyers’ demand. As of July 2020, the Index of Housing Rental Prices (IPHRP) in Great Britain (excluding London) reached 109.8 index points, showing a 9.8 percent increase in rents compared to 2015.
House prices and home ownership in the UK vary depending on the type of property and location. In Leeds, London and Manchester, between 21 and 33 percent of the population in each city own their home, which is a number significantly lower than the average home ownership rate of 65.5 percent. To a large extent, this could be attributed to the higher asking prices of properties in these regions. As of the fourth quarter of 2019, for instance, the average asking price of a property in London was 698,700 British pounds, while in the North East it was 164,100 British pounds.
It is still too early to predict how exactly the UK housing market will develop in the long run. After the end of the stamp duty holiday, sales activity is expected to slow down along with price and rental growth. While this might sound discouraging, the past year has showed us that the sector is much more resilient than initial fears suggested.
