UK housing market UK rents uk house prices

Cheap mortgages and economic rebound continue to support housing market

Over the past 15 months, house prices have climbed at a rate higher than most experts would have predicted in the face of recent events. Industry insiders look at whether these trends will continue in the UK housing market.

Through the highs and lows of the pandemic, the property sector has remained extraordinarily resilient. While there are many factors at play, the latest roundup from Savills points to two key pillars supporting the rise.

The first of these is the cheap borrowing rates that continue to be available. The Bank of England base rate remains at an all-time low of 0.1%, and this has kept mortgage lenders’ offerings competitively low. According to Bank of England data, the average 2-year fixed rate for a 75% loan-to-value (LTV) mortgage is currently just 1.23%. This is down from an already low 1.86% at the beginning of 2021.

Even borrowers with lower deposits can secure extremely competitive deals. With a 15% deposit, borrowers can get an average rate on a two-year fixed mortgage of 1.99%. For a 90% LTV mortgage, the average rate is now just 2.47%.

Drawing more people to UK property

Property prices in the UK housing market are continuing to climb. While monthly house price indices are notoriously volatile and easily skewed, they nevertheless paint an overall picture of the confidence currently in the sector.

For example, the Halifax index reported a monthly price rise of 0.7% in August. Year-on-year, house prices in the bank’s index rose by 7.1%.

The Office for National Statistics (ONS) also released its data on how house prices have faired to date. It recorded an 8% rise in property prices over the past year.

House prices aside, Savills reports sustained optimism in the UK housing market.

“Interestingly our own client survey, that is weighted to the top end of the housing market, suggests that a net balance of +16% of potential movers have become more committed to moving in the next 24 months, slightly lower than the +22% in June. Meanwhile 61% said their ability to buy has been significantly inhibited by a shortage of stock.”

Growing economy will attract investment

The past 18 months has presented challenges for many parts of the economy, and this applies worldwide. However, the UK showed a strong rebound during the first half of 2021, according to ONS data. It now reports a levelling off in its July data, but this does not detract from the prior performance.

As Savills points out, this economic rebound has helped to stimulate activity in the property sector. Oxford Economics, says the Savills report, expects the UK economy to grow by a total of 7% this year.

In terms of investment from overseas, the UK housing market has historically been seen as a “safe haven”. Appetite for investment in the sector remains extremely high, particularly as housing stock falls short of demand right now.

“It looks as though a shortage of stock is likely to continue to support house prices over the remainder of this year,” says Savills.

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:

STAY AHEAD OF THE MARKET

Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment

FIRST FOR NEWS AND KNOWLEDGE.

Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:

 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

 

+852 6699 9008

Open from 9am-6pm HKT