If you have been keeping tabs on the UK property market, you are probably aware that it’s experienced one of its strongest periods of growth in the last year. The most recent figures from Nationwide show that annual house price growth hit 10% in November, with prices rising by 0.9% month on month.
But what’s the outlook for the future? Additionally, what do current trends in the market mean for those who are planning to buy?
What happened to house prices in November?
The latest House Price Index from Nationwide shows that annual house price growth hit 10% in November, slightly up from 9.9% in October. Month on month, prices were up 9.9% (or £2,367). According to Nationwide, house prices are now almost 15% above March 2020 levels when the pandemic first struck the UK.
The slight increase in November comes after a brief lull following the expiration of the Stamp Duty holiday in September. Many buyers had pushed their purchases forward to take advantage of the tax break.
According to Ross Counsell, chartered surveyor and director at GoodMove, the upsurge observed last month could be a result of demand outweighing supply due to sellers postponing putting their properties on the market until the new year.
What’s the outlook for the future?
The outlook for the future remains uncertain according to Counsell. He says, “Right now, with the ‘Omicron’ variant hitting the headlines, there is increased uncertainty surrounding the housing market and the wider economy.”
There is also the issue of inflation, which is expected to hit 5% in the coming months. Increased inflation will result in an increase in the cost of living, which, according to Counsell, may cause first-time buyers, in particular, to be hesitant to commit to such a large purchase due to increased uncertainty around their financial security.
That being said, there are still a couple of factors that could continue to support activity.
For example, early indications are that labour market conditions are remaining robust despite the end of the furlough scheme in September. In addition, the ‘race for space‘ is still on, with many Brits reassessing their housing preferences and looking forward to moving to larger properties.
What’s the best course of action for buyers?
For those looking to buy a property, Counsell’s advice is to monitor the economy, the housing market and Covid-19 developments. He states, “Once these factors begin to stabilise, this is when I would suggest is the best time to purchase a property.”
In the meantime, the best thing you can do as an aspiring buyer is to keep saving money. A decent amount of savings will ultimately give you more purchasing power down the line.
As for where to put your savings, that is completely up to you. But in the current era of high inflation and low interest rates, a traditional savings account might not be your best option.
Consider putting some of your money into a Lifetime ISA (LISA) if possible. This is a tax-free account that you can access if you’re aged between 18 and 39. It’s designed to help you save for your first home or for retirement. You can deposit up to £4,000 every year into a Lifetime ISA, and the government will then reward you with a 25% bonus.
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