UK House prices are accelerating like Mr Blobby running down a hill! They are predicted to rise by up to 3.5% per year for the next three years according to a report by the estate agent Hamptons. It’s devastating news if you’re a first-time buyer or hoping to move house soon.
Here, I take a look at how much UK house prices are likely to increase and why prices are skyrocketing. I also investigate whether there is any good news on the horizon and explain why I think that now is the best time to buy if you can afford to do so.
How much will house prices increase?
The estate agent Hamptons predicts that house prices will increase by 13.5% over the next four years. That prediction is based on detailed figures suggesting that house prices will rise 4.5% in Q4 of 2021, 3.5% in 2022, 3.0% in 2023 and 2.5% in 2024.
These price increases follow on the heels of massive house price inflation of 6.1% in 2020. If Hamptons are right, then that will be a stonking 19.6% increase in just five years between Q4 of 2019 and 2024!
Why are UK house prices so expensive?
So just why are UK house prices so high? And why are they accelerating at such a fast rate?
Experts blame current rising prices on increased demand as people rush to relocate, looking for more space. But there are several underlying factors that may push up prices even more over the next few years:
- There is a shortage of homes in the UK. This drives increased demand, which, in turn, causes house prices to rise.
- Foreign investors are piling in to buy up houses in London. This too increases demand and fuels price inflation.
- Hamptons expect mortgage rates to drop for first time buyers in 2022. This could fuel more demand and even greater price increases.
- There is likely to be an economic recovery during 2022. As businesses recover from the effects of the Covid pandemic, this too is likely to push up demand and prices.
Is there any good news?
With so much grim news on house prices, is there any good news for first-time buyers?
Well, there is potentially some good news on interest rates. Hamptons expect mortgage interest rates for first-time buyers to drop to more affordable levels in 2022. Fantastic interest rates are currently available for buyers with big deposits, but not for those with smaller deposits. Better rates for first-time buyers could be great news if you’re currently saving for a deposit!
Why I think now is the best time to buy
If you’ve saved up, can afford to buy now and you’ve seen the right house for you, then there’s no point waiting for house prices to drop. It looks increasingly likely that the UK housing market will continue to bubble like an overheated stew until at least 2024.
It might be time to take a deep breath and take the plunge. Houses are expensive in the UK, but at least you’ll own a little slice of that expensive market!
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