Homebuyers who have been considering getting on the property ladder for some time should do so sooner rather than later after it has been revealed that house prices have shot up by as much as £24,000 over the last 12 months.
According to the latest UK House Price Index from the Office for National Statistics, the average cost of a home was £250,000 in January 2021, rising to £274,000 in January 2022.
This represents a 9.6 per cent increase over the year, with this figure increasing to 10.8 per cent in Scotland and 13.9 per cent in Wales. It was slightly lower in Northern Ireland at 7.9 per cent.
The average house price in Scotland is £183,000, which is still significantly lower than the UK average. In comparison, houses in England are typically £292,000, which is a record high.
Homebuyers in London might not feel as much pressure to act quickly, as house prices in the capital are not rising at the same speed. The city recorded the lowest rate of annual growth out of the whole of the UK between January 2021 and 2022, a decline from 5.1 per cent the previous month.
However, mortgages for properties in London are still likely to be the highest, as homes here are the most expensive compared with any other region. According to the statistics, the average price of a home in the capital was £510,000 in January 2022.
Jeremy Leaf, former RICS residential chairman, told This Is Money these figures show the “resilience of the housing market”, particularly during the current international climate.
“On the ground, existing homeowners whose purchasing power has been buoyed by savings and equity, still remain keen to find homes which fit their post-Covid lifestyle,” he stated.
Mr Leaf stated: “Affordability is more of a factor for those buying for the first time, so will have some impact on prices.”
Indeed, first-time buyers (FTBs) who were planning to buy last January now must raise another £2,400 if putting down a ten per cent deposit. Those who are planning to provide a greater down-payment will need to boost their deposit by even more than this.
Moreover, they will need to apply to borrow more finance from mortgage brokers, which may be difficult depending on their earnings and circumstances.
Comparatively, people who are already on the property market will still have to pay more for their next house. However, their current residence would have also increased in value, boosting the deposit they can put down on the subsequent purchase.
This means it is currently easier to climb the property ladder than it is to get on it in the first place, particularly as the country faces increasing pressure on household finances.
BC recently reported the cost of living has reached a 30-year high, with prices soaring by 5.5 per cent in the year leading to January 2022. It is expected to climb to more than seven per cent this year, with inflation increasing faster than earnings.
What’s more, electricity bills have increased by 19 per cent and gas bills have soared by 28 per cent, according to ONS figures.
For help getting on the property ladder, consider our mortgage application services today.
