The prices of buying in the UK is climbing at an alarming rate particularly in Merseyside and Manchester. Over the past year, there has been an over 20 per cent increase in the average price of properties in the region, according to an analysis by property consultancy firm, e.surv.
The report shows that since the pandemic broke out, the average home prices across different regions in England has risen by over 13 per cent, recording the highest annual growth rate in the real estate market for nearly 17 years. In May, to purchase a property in either Manchester or Merseyside, you would need to pay an average of £343,658—an increase of about £40,500 in just 12 months.
In other places in England excluding the South East and London, the annual growth rate was a little above 17 per cent with a monthly increase of £1,800. For prospective homebuyers, these statistics meant one thing: owning a home at this time is a huge financial investment and estimating mortgage affordability based on income is crucial.
The price growth rate of houses in the South East and London has been much lower than in other regions but at an average cost of £648,239, the prices of properties in London has boomed over the past year due to the pandemic—something that can be said about other regions in the UK.
“Overall, we can see the market continues to enjoy the effect of the government’s stamp duty holiday. Buyers are still striving to complete purchases in time to benefit from the maximum tax break ahead of the change in June to a tapered deadline,” said Richard Sexton, director at e.surv Chartered Surveyors in a report.
There has been a massive shift in the quality of homes that buyers are searching for, according to Sexton. The pandemic led to government-issued stay-at-home orders, meaning more and more people have had to work from home, over the past few months. Now, the demand for bigger homes equipped with gardens and located outside city centres has grown.
For flats, especially those in the inner and central areas of London, the pandemic has affected the mortgage acceptance rate by lenders with remote work arrangements and less interest from foreign buyers due to COVID-19 induced restrictions.
The constantly increasing property prices in places like Manchester has become quite worrisome for many prospective buyers and according to Peter Williams and John Tindale, senior analysts at Acadata, several factors are contributing to the current surge.
The major drivers are the historically low mortgage interest rates, lifestyle changes due to the pandemic causing more people to move into bigger spaces, improved savings due to the lockdown, the availability of COVID-19 vaccines and also, the temporary suspension of property purchase tax on properties bought in both Wales and England, said the analysts.
However, government support for the housing market is poised to end by the third quarter of this year and it is still left to be seen how much of an impact it would have on the current house prices.