Are UK Property Price Rises Gradually Slowing?

13 Apr 2021

Are UK Property Price Rises Gradually Slowing?

Over the last year, we've seen considerable variances in average property prices, as the market first stalled and then resumed with force.

The introduction of the stamp duty holiday has been an added incentive for home movers and investors to snap up bargains while the reduced tax liability exists - and this extraordinary level of demand has inevitably caused prices to rise.

While that's excellent news for sellers, it can be challenging for first-time buyers to seek affordable homes or investors to identify lucrative portfolio opportunities without the potential for devaluation when the market stabilises.

In this article, the Revolution Brokers team looks at the annual house price index and how things have changed over quarter one.

How is the UK Property Market Performing After Q1 2021?

Sales and transactions continue apace, driven not only by stamp duty factors but also by increasing homeowners looking for less central properties.

As home working looks to be around for the future, having a home within a commutable distance is less a priority, as are space, gardens and family living.

The Revolution team predicts that, while London will always have a substantially more valuable property market than anywhere else in the UK, other regions will be the primary focus for continued market growth.

Let's look at some of the stats:

  • After March 2021, the overall UK market has dropped 0.2% month-on-month.
  • The market looks set to continue to be robust for at least the next six months.
  • London has been the region of slowest growth across the UK in the quarter.
  • In England, the northwest saw the most significant increases, with average properties selling at 7.4% higher.

All in all, property prices are continuing to rise - although not as steeply as before. London, for example, has seen an annual house price growth of 4.8% in March, compared to 6.2% at this time last year.

However, that doesn't mean that prices will drop - but that the rate at which they increase may be starting to plateau.

Where are the Best Places to Invest in UK Property in April 2021?

Investments are always subjective, so before considering where you'd like to buy, it's also vital to consider other factors such as:

  • Long-term demand for rental properties in the region.
  • Proximity to facilities such as universities, transport links and train stations.
  • Average property prices in the area.
  • How much you have to invest, and the return you expect to see.

Landlords are looking at good prospects in those areas where prices are still on an upward trajectory, with the potential of reselling or refinancing against a greater valuation figure in a short space of time.

The best places to currently invest, according to annual house price growth, are as follows:

  • Northwest England - house price growth of 8.2% year-on-year with the highest increase across the UK. The current growth rate is a 16-year high and is similarly strong in the north with a 7.2% price increase.
  • Northern Ireland - Irish properties have grown in value by 7.4%.
  • Wales and Scotland - these regions have seen house price rises of 7.2% and 6.9%, compared to 5.7% as a UK average.
  • Southwest England - properties in southwest regions have grown by 7.2%, making this the only area in this part of the country to see the annual price growth rate increase from the same time the year before.

Another positive is that mortgage lenders currently offer incredibly competitive rates, both on residential and buy to let borrowing.

That reflects the changing attitude of mortgage providers now that the route out of lockdown is well underway with fierce competition to entice new customers following the difficulties of the last year.

In short, if you can purchase a property now, as opposed to in six months, you stand to:

  • Make a substantial saving on stamp duty liabilities.
  • Purchase a property that will likely be worth several percentage points more in a short space of time.
  • Achieve lower-cost mortgage rate and attractive arrangement fees.

Why are UK House Prices Continuing to Rise?

The reason for this sustained growth relates to several economic factors, not least the reopening of non-essential businesses.

Property demand isn't solely about tax rates and selling prices but about lenders' appetite to accept flexible application terms and confidence in movers and investors that the home they select will be a viable long-term investment.

Although the last year has been fraught for many industries and sectors, in general, the economy and labour market have exceeded performance expectations. While we've seen the rate of growth soften in March, this is likely because, at the time, many buyers were uncertain about whether the stamp duty holiday would end on 31st March or be extended further.

Given the time required to arrange mortgage borrowing and perform the eligibility and assessment checks, thousands of transactions paused in advance of the Budget announcement.

We now know that:

  • The higher stamp duty threshold of £500,000 will remain in place until 30th June.
  • From 1st July until 30th September 2021, properties costing under £250,000 will be exempt, with the standard threshold of £150,000 for commercial purchases.
  • As of 1st October 2021, stamp duty thresholds revert to £125,000 for residential accommodation.

Having the assurance of the continued opportunity to save on typical stamp duty rates has doubtless been a driving factor in the property market price rises and the level of demand.

We can't yet know whether, later in the year, the volume of property purchases will drop. There is potential that the recovery and efforts to stimulate the economy will have a long-term positive impact and ensure that housing demand momentum remains at record highs.

Conversely, it is possible that when furlough schemes end, and there are potential declines in the labour market, we could see price rises slowing.

In the meantime, the outlook for the market is strong, and with a combination of high consumer demand for rental homes and mortgage borrowing, it looks to be a summer to remember.

Please contact the independent experts at Revolution Brokers for more information about fast-track mortgage borrowing or to compare the best rates currently available on the market.

Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.



Almas Uddin

Related Posts

26 Jan 2022
How Does a Remortgage Application Work?

Most homeowners know that remortgaging means switching a mortgage from an existing lender over to a new deal. However, the process isn't always obvious. If you're on a fixed-rate deal, you'll want to get ahead of the end of the term to avoid being shuffled onto a higher standard variable rate where your interest costs will undoubtedly ..

17 Dec 2021
Understanding Lender Risk on First-Time Buyer Mortgages

Finding a great mortgage as a first time buyer can feel like an uphill struggle, with a larger proportion of applicants being turned down than a year ago. Around 20% of first-time mortgage applicants are rejected, usually because of the lender risk associated with their loan. Today, Revolution Brokers explains the highest risk facto..

28 Oct 2021
Pros and Cons of First Time Buyer Buy to Let Mortgages

Investing in a rental property can be an excellent way to get onto the property ladder and earn an income. However, if you haven't owned a residence before, you might find that a mainstream bank will automatically turn you down for a buy to let mortgage. In today's guide, the Revolution Brokers team explains how you can become a ren..

FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.