Houselungo 17 April 22
House prices reach another new high
The average house price in the UK is £276,775, average prices have increased by 10.9% or (£27,169) over the last year, and increased by 0.5% or (£1,473) last month. We note that these figures are provisional and subject to change, but it seemed that in February 2022 the momentum of 2021 had returned.
UK average house prices have increased by 20.0% (£46,146) since the start of the COVID-19 pandemic.
UK house prices rose in seven regions and fell across three regions of the country in February 2022. Overall average house prices rose by £1,473 across the UK as the spring selling season started to stir.
The Land Registry data is the most accurate house price data, in our view, although its publication lags the other major house price indices. The other indices have shown continued growth so far this year and we expect the same of the Land Registry Gold Standard index in the months to come.
We continue to believe that in the medium-term demand will outstrip underpinning house prices.
In the article below, we look at the house price performance of each region across England and Wales.
The hottest 25 UK housing markets right now
We often talk about 'the UK housing market' and 'UK house price inflation' as if there is one housing market and one rate of house price inflation. Neither is true.
The UK is made up of hundreds if not thousands of tiny housing markets, which operate independently of each other. One person buying a home in Swindon does not move the housing market in Stockwell.
In this article, we look at the hottest 25 housing markets across the country.
Biggest house price increases last month
The biggest house price winner last month was in Merthyr Tydfil in Wales where house prices increased by 7.2% or £9,940.
In second place came South Holland in Lincolnshire where house prices increased by 6.4% and in third place with house prices rising by 6.3% was Cambridge.
Interesting to see that three different regions make up the top three.
To see which housing markets rose the most in monetary terms last month and over the last twelve months, click read more below
The tide turns as housing supply rises to meet demand
RICS released its latest UK Residential Market Survey for March 2022 on Thursday
What they said
New instructions indicator turns positive for the first time in 12 months
Buyer demand continues to increase
House price growth remains firm
Twindig take
It is good news that Agents reported an increase in the supply of homes to the market for the first time in 12 months, in 2022 vendors are putting the 'selling' into the spring selling season. The increase is only a small one, and stock levels remain close to historic lows, but hopefully, the tide is turning with more supply waiting in the wings. If the supply of homes continues to increase it should help alleviate some of the pressure on house prices which continue to rise at pace.
Agents remain positive about the near term outlook for the UK housing market, but are cautious of the macroeconomic headwinds (rising cost of living and increasing interest rates).
But is mortgage supply about to fall?
The Bank of England published its Q1 2022 Credit Conditions Survey on Thursday
What they said
Mortgage supply expected to decrease in the coming quarter
Demand for mortgages expected to increase in the next three months
Default rates on mortgages expected to rise
Twindig take
Coming on the back of record house prices and RICS suggesting that housing supply was finally starting to respond to the high levels of demand, the Bank of England's Credit Conditions Survey was rather downbeat, and risked putting a bit of a downer on the Easter Weekend
In our view, lenders expecting the supply of mortgages to reduce in the next three months was the headline of the report.
This is the first time mortgage supply has been expected to reduce since Q3 2020. No doubt the increased costs of living and rising trajectory of bank rate are on lender's minds. The majority of house purchases are funded by a mortgage and as we saw during the Credit Crunch the supply of mortgages is critical to the overall health of the housing market. Whilst the COVID-19 pandemic did little damage to the housing market a reduction in mortgage supply, if significant, could knock it for six.
Twindig Housing Market Index
This week was a mixed week for the housing market, for the most part, it was sunny and warm, but on Thursday, there was a sting in the tail as the Bank of England released its latest Credit Conditions Survey. Against this backdrop of yin and yan, the Twindig Housing Market Index fell by 1.4% to 78.4
The bombshell (or perhaps faint air raid siren) was that lenders expect mortgage supply to reduce in the next three months. Whilst the housing market was unphased by the COVID-19 pandemic, it can't deal with a shortage of mortgages. Mortgages are the air that the housing market breathes. We only have to look back at the Credit Crunch to understand that.