Supply continues to compound widening gap between house prices and income, says RSM

According to today’s UK House Price Index by the Office of National Statistics average house prices have risen by 10 per cent in the year to November, and are continuing to show strong growth with average UK house prices now at £271,000 just below the record average of £272,000.

Ian Taylor, partner at RSM UK comments on today’s figures:

‘The rise in house prices for the year of approximately £25,000 would be surprising at a time of economic turbulence. However, there is a clear lack of supply in the market and with borrowing rates still at historically low levels the increase in prices is not putting purchasers off. There is a bit of headwind with rising household bills and further restrictions over the Christmas period which will probably mean that growth will not have been as strong in December 2021, but the overall growth is still well ahead of expectations. It also shows that the market has shrugged off the impact of the stamp duty holiday ending.

‘The regions have driven the growth in house prices with the South West, East, North West and East Midlands all experiencing double digit growth. London has experienced the lowest annual growth of 5.1% but still has the highest average prices in the UK at £520,000. The growth in the regions has again been driven by a lack of supply but there is also anecdotal evidence that purchasers are looking more to the regions as they change their working habits and commute less into the major cities.

‘This increase in prices further compounds the growing gap between house prices and people’s income and until the lack of supply is addressed appropriately this gap will only continue to grow. This means the younger generations will struggle to get on the property ladder without government assistance or help from the bank of mum and dad.’