Market Trends of UK Residential Real Estate Industry
Increasing in the United Kingdom House Prices
Average house prices are affected by several factors Economic growth, unemployment, interest rates, and mortgage availability can all affect average prices. A shortage of supply means that the need for housing and, therefore competitive market created will push up house prices, whereas an excess of housing means prices fall to stimulate buyers. Average house prices are affected by several factors Economic growth, unemployment, interest rates, and mortgage availability can all affect average prices.
A shortage of supply means that the need for housing and, therefore competitive market created will push up house prices, whereas an excess of housing means prices fall to stimulate buyers. When it comes to the average price of housing, this is certainly true in the United Kingdom (UK). As of June 2022, the average house price in London was roughly double the national average. At over 538,000 British pounds (USD 648021.00), the capital of England has the highest average house prices in the entire UK.
Even within London, average house prices varied massively. To live in Kensington and Chelsea, the average house would set back withover one million British pounds (USD 1.20 Million). At the other end of the scale, a house in Barking and Dagenham would cost about a quarter of that seen in Kensington and Chelsea. In 2022, the number of housing transactions in the UK reached 1.3 million. With the expected increase in transactions, the average house price is also set to grow across the UK.
Increase in Residential Properties across the United Kingdom due to favorable Mortgage Rates
After stagnating due to the coronavirus pandemic in 2020, activity in the residential property market in the United Kingdom surged in 2021, followed by a decline in 2022. From approximately one million transactions with a value of 40,000 British pounds and above in 2020, the transaction volume reached nearly 1.5 million in 2021 and 1.3 million in 2022. For residential transactions, England made up the majority of completions.
The number of monthly mortgage approvals for a home purchase in the United Kingdom peaked at over 100,000 approvals in November 2020, after falling to record low levels at the beginning of the coronavirus pandemic in the second quarter of the year. The spike was due to the easing of the first lockdown and a rise in the demand for housing. In 2022, the housing market started cooling down and this was reflected by a falling number of mortgage approvals. In October 2022, there were about 58,000 mortgage approvals. Remortgaging approvals followed a similar trend.
Mortgage rates increased at a record pace in 2022, with the 10-year fixed mortgage rate doubling between March 2022 and December 2022. With inflation increasing, the Bank of England introduced several bank rate hikes in 2022, resulting in higher mortgage rates. After falling in 2020 due to the coronavirus (COVID-19) pandemic, both the number of residential properties sold and the gross value of mortgage lending surged in 2021. Of the plus one million transactions made across the United Kingdom in 2021, the majority of residential properties were sold in England.
The meager mortgage rates that have helped intensify housing market demand are expected to continue to grow higher during the study period. Thus, this is driving the residential real estate market in the United Kingdom.
