Economist comment: No let up in house price growth
Commenting on today’s ONS HPI figures, Nitesh Patel, Strategic Economist at Yorkshire Building Society, said:
Today’s data release shows that despite the Stamp Duty tax saving having ended in September there is no let-up in house prices growth. In the year to November, house prices grew by 10.0%, edging up from 9.8% in October. The performance of the housing market during the pandemic has been an eye-opener with the average house price now at £270,708 compared to £230,609 in February 2020, a month before the first lockdown – that represents an increase of £40,000 in cash terms.
The appetite for larger homes continues unabated with the price of detached homes growing by 13.9% which is more than double the 5.6% price increase for flats over the past year. Demand is strongest in areas of better affordability – namely the northern areas, where the average house price is significantly less than the UK average of £270,708.
With buyers still re-evaluating their housing needs and first-time buyers increasingly important in the market we expect demand will continue to exceed supply, with fewer homes from existing stock coming up for sale and new builds still low. This combined with low borrowing costs and a strong jobs market should all support prices. And importantly households in aggregate have built up large stock of excess savings since the first lockdown, which should help with a deposit.