UK house price growth surges to its highest level since 2004 says Nationwide
Annual house price growth increased to 14.3%, from 12.6% in February according to Nationwide.
Detached properties have increased by nearly £68,000 since onset of pandemic, while average flat prices up £24,000
Robert Gardner, Nationwide’s Chief Economist, said:
“March saw a further acceleration in annual house price growth to 14.3%, the strongest pace of increase since November 2004. The price of a typical UK home climbed to a new record high of £265,312, with prices increasing by over £33,000 in the past year. Prices are now 21% higher than before the pandemic struck in early 2020.
“The housing market has retained a surprising amount of momentum given the mounting pressure on household budgets and the steady rise in borrowing costs. The number of mortgages approved for house purchase remained high in February at around 71,000, nearly 10% above pre-pandemic levels. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.
“The significant savings accrued during lockdowns is also likely to have helped prospective homebuyers raise a deposit. We estimate that households accrued an extra c£190bn of deposits over and above the pre-pandemic trend since early 2020, due to the impact of Covid on spending patterns. This is equivalent to around £6,500 per household, although it is important to note that these savings were not evenly spread, with older, wealthier households accruing more of the increase.
“Nevertheless, we still think that the housing market is likely to slow in the quarters ahead. The squeeze on household incomes is set to intensify, with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high. Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”
Detached properties have seen the strongest price growth through the pandemic
The Nationwide added that shifts in housing preferences as a result of the pandemic have been a significant driving factor of housing market activity over the past two years. Last year, our research identified a ‘race for space’ and this was reflected in price trends by property type, with detached homes seeing the strongest growth and flats the weakest.
Between Q1 2020 and Q1 2022, the average price of a detached property increased by 22.6%, nearly £68,000 in cash terms. Meanwhile, over the same period, flats only increased by 14.1%, around £24,000 in cash terms.
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