House prices in the UK increased by 2.5 per cent from August 2021 to September 2021, resulting in annual growth of a huge 11.8 per cent according to the ONS house price statistics. Commenting on the data, Stacy Eden, partner and co-head of real estate and construction at RSM UK, said:
‘The current rise in house prices is astonishing, and outstrips average earnings significantly due to a shortage of supply. The government needs to reform planning so we can build more houses and ease the pressure for first time buyers. The rapid annual house price rise of almost 12 per cent in the year to September makes it increasingly difficult for young people to get their foot on the property ladder. Even with a £12 billion Affordable Homes Programme, we won’t get back to 2019 levels of housing delivery until 2026. Until the government reforms our planning regime to help resolve the housing crisis, rather than fuelling demand with government support to buyers who are over stretched anyway, we won’t see a fairer and more equitable housing market any time soon.
‘We do predict annual growth slowing towards the end of the year though now that the stamp duty holiday has ended, with five-year forecasts from 2022 estimating house price growth will be in the region of 3 per cent per year.
‘The average increase in house prices for this year of approximately £26,000 is surprising at a time of economic turbulence, however this has been spurred on by low borrowing rates and a lack of housing supply. With shifting lifestyle choices driven by an increase in home-based working it is not surprising to see detached houses grew at the highest annual rate (14 per cent) compared to flats (6 per cent) as people relocated to the suburbs and countryside. London showed the slowest regional annual growth at 2.8 per cent, and a fall of a similar amount in the month, driven by sluggish prices of older flats.
‘Furthermore, the 15 per cent annual rise in new build properties highlights the premium now attached to new build compared to existing properties, particularly in the flat market.
'Until our planning system is reformed - which is now looking less likely as the government is watering down planning reforms to boost housebuilding - we will continue to have the situation where house prices bear less relevance to people’s income. The younger generation will continue to struggle to get on the property ladder without government assistance.’