UK house prices surged by more than two-thirds in the decade to July 2022, with the most significant increase seen in the past twelve months.
This can be largely attributed to the usual shortage of properties for sale despite reduced demand as the cost-of-living crisis continues to squeeze pockets further.
Between July 2012 and the same month this year, the average house price in Britain soared approximately 71% to £292,118 from £170,701, according to Land Registry data, which is a government department that looks at land and property information.
The Land Registry data set was compiled from the Office for National Statistics’ (ONS) average house price numbers.
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Source: Land Registry, Office for National Statistics
The Land Registry data showed that house prices climbed around 38% in the eight years to July 2020, which would equate to an average of 4.75 percentage points each year.
In the 12 months to July 2022, however, the average cost of a house rocketed over 15% to a fresh record high – well outpacing the historical average of just under 5% per annum.
Why have house prices risen so much in the last year?
One of the biggest reasons that house prices have grown is a shortage in the supply of homes and constraints in house building.
The government estimated the UK needs to build 250,000 new homes a year to keep up with the growing population and number of households demanded, Trading Economics noted.
Despite falling demand in the last year due to 40-year high inflation and the cost-of-living crisis, the number of homes wanted has still been exceeding the supply of houses available, which has exacerbated the rising price problem.
The almost unprecedented double-digit inflation of late has been notching values up further, with the cost of running a home now higher due to Russia’s invasion of Ukraine, an event that has sent energy bills rocketing.
Another reason is that the returns on buying property have long outperformed the stock market, which has encouraged a new wave of ‘buy to let’ investors who have boosted demand.
In recent times, the percentage of first-time home buyers has fallen drastically but the economical desire for people to have their own property has grown.
It has, therefore, become more common for parents to help their children buy a house, helping many first-time buyers to overcome the obstacle of surging prices and buy a home.
Finally, in the wake of the pandemic, more people have been working from home, which makes having a good living space more desirable.
This, in turn, makes people think twice about whether they need a bigger home or more workspace, hiking demand and eventually prices.