July 2021 UK House Price Index – Overview

July 2021 follows the trends of previous months and shows no weakening of the current prevailing factors in the housing market. We provide a summary of the UK House Price Index 2021 in this article.

Strong growth continues

UK house prices continued to rise strongly in July. The biggest winners continue to be regions where property is cheaper on average. For example, Wales topped the rankings with growth of 9.4%. It was closely followed by Northern Ireland with 9% and the North West of England with 7.9%.

One outlier from this rule of thumb is Liverpool. The major English city was able to record price growth of 9.4% despite an already very competitive property market. Regions where very high property prices are the norm grew less in July 2021, with London, for example, only managing 2.5% price growth. The average home in the UK should see price growth of between 4% and 5% in 2021.

Demand higher than supply

The huge price rises for property in the UK can still be attributed to unusually high demand. A great many people are trying to change their circumstances within the Corona Pandemic by rethinking their current housing situation.

For many people this means wanting a larger house with a larger property. This irrevocably leads to house prices rising much faster than flat prices. Another factor enabling these shifts is home office work. In the future, many workers will have the opportunity to do large parts of their work from home, making it less important to live close to where they work.

In general, these factors have led to houses on the market being bought twice as fast on average, creating more competition in the property market. As a result of these influences, property prices are once again rising.

Fewer new houses

Another reason why demand is significantly higher than supply is that the construction industry was hit hard by the lockdown. As a result, on average 11% fewer properties were completed in the UK than in March 2021, making the remaining properties more valuable as they become scarcer.

Low taxes and easy credit

It can also be seen over this period that the purchase tax on property in the UK has dropped significantly due to the Stamp Duty Holiday. This saves buyers a lot of tax when buying a property, which means even more people are looking for a new home.

Last year loans were also much harder to obtain and borrowers were charged higher interest rates. This has decreased in 2021, allowing more people to access a property loan that enables them to participate in the property market.

Outlook

All of the factors driving property price growth in the UK should remain in place in the near future and continue to provide stable growth into 2022. For this reason, property investors in the UK are currently in a very good position and can rest on a successful investment.

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