UK Property Prices 2021: Where Are We Now?

The UK’s housing market has been in a state of flux for quite some time. From lockdown disruptions, which prevented sales and saw the industry grinding to a halt, to the post-lockdown boom, there have been significant ups and downs through 2020 and 2021. However, is it likely this instability will continue?

a landscape photo of a city or town

Some predicted the increased demand for property (fuelled by changes to permitted development rights and the government’s ‘stamp duty holiday’) would abruptly come to an end in 2021, causing a significant crash in the UK’s house prices. Into summer 2021, headlines like “Is the UK Housing Bubble About to Burst?” have been commonplace. However, is there really cause for concern?

Here, we provide a comprehensive breakdown of the housing market in 2021 and make our predictions for what comes next.

 

What Happened to Property Prices in 2020?

Property transactions began at a steady rate in early 2020, until March when the first national lockdown shut down the market completely. Understandably, property transactions from April 2020 onwards decreased, and house price growth also fell.

In the latter half of 2021, we saw a rapid and significant rise in both transactions and price growth, as pent-up demand and government incentives prompted an increase in property sales and purchases. UK house prices rose to a high of 7.6% in November 2020 – a rate considerably higher than those seen in recent years, and the highest since June 2016.

A graph showing a positive trend

In response to this sharp incline, housing market predictions warned of an inevitable crash with the inevitable levelling-out of demand.

 

Property Prices in 2021: Where Are We Now?

The UK property market has proved its resilience throughout 2021 so far, with average house prices increasing over the year in England to £271,000 (7%), in Wales to £188,000 (11.6%), in Scotland to £177,000 (14.6%) and in Northern Ireland to £153,000 (9.0%).

London property prices have seen the slowest growth, with a twelve-month percentage change of 2.2% (July 2020 to July 2021), according to the Office for National Statistics.

Alongside these positive figures we have seen an extension of the Stamp Duty Holiday in England and Northern Ireland, and the Land Transaction Tax in Wales. With rates only returning to pre-Covid levels in June (for Wales) and on 1st October (for England and Northern Ireland) it is too early to gain a clear picture of how influential these incentives have been.

 

The Housing Market in 2021 and Beyond

We know first hand that developers and investors are anxiously observing the housing market for signs of an impending slump, but are these concerns warranted?

Tom Lee, Managing Director at Pure Structured Finance, says:

“Growth in the UK’s housing market so far this year has been unprecedented. While we expect increases in transactions and house price growth to return to more standard levels, a severe crash or drop in the market is not a likely outcome.

Instead, we are seeing rental prices remain steady and land (both in prime and rural areas) retain its value. Ultimately, there is still significant opportunity for property developers and investors.”

 

Navigate the Changes with Pure Structured Finance

If uncertainty in the market has left question marks over the success of your project, we are here to help.

Our skilled team is on hand to provide the expertise you need to finance and realise your project. So, whether you need residential investment finance or commercial investment finance for your next brick and mortar purchase, contact us today.

Article By Andrew Hosford

October 15th, 2021

Andrew is a Director within Pure Structured Finance and a founding member of the company.

He previously spent a decade with a real estate advisory firm where he was a Director focused on arranging finance for property investors and developers across all asset classes.

See more articles by Andrew