Is The Average UK House Close to Reaching £300,000?

The 2020 and 2021 period has been a strange one for the economy, especially with the onset of covid-19 in 2020 and recovery efforts being made to get things back to normal in 2021. With all the happenings, one sector of the economy that has seen great transition is the real estate sector. There have been bizarre or unexpected increases in the national house prices in the UK during this time. With the increase, it’s no surprise that the average house price had hit the highest at £266,000 in June but then reduced to £256,000 in July 2021.

Compared to the figures in June and July 2020, a rise of £31,000 is seen, which is considered the sharpest average price rise in real estate since early 2000.

Regional Average House Prices in the UK as of July 2021 Till Now

Different regions in the UK experienced different price increases. Below are the price increases:

• England. The average price increased to £271,000, which was a 7% rise from July 2020.
• Wales. The price increased to £188,000, which was an 11.6% rise from July 2020.
• Scotland. The average house price increased to £177,000, which was a 14.6% increase and the highest in all the regions in the UK.
• North Ireland. The average price increased to £153,000, which was a 9% rise from July 2020.

What is Interesting About the Price Increases

With the increase in the average house prices, London and the pricey southeast were expected to have the sharpest increases, but that’s not the case. In fact, London is the region with the lowest annual growth for several months in a row. The abnormal average price increases are being experienced in the areas that one can say were more affordable when the covid-19 pandemic began.

The House Prices Trend in the UK

Many people say that the recent sharp spike in average house prices in the period between February and July was due to the fast-coming deadlines dates for the reduction of stamp duty. This, to some extent, may be true, but if you were keen on the price changes and increases, you could easily notice that the prices were steadily rising even on the other months of the year. This has been a trend for quite some time, and it would end anytime soon. So, prices are expected to continue rising over the years if the rates remain the same, and the average UK house price may reach £300,000 as soon as July 2023.

Why the Sharp Rise is Expected to Slow Down in the Coming Months

As the economy recovers from the effects of Covid 19, many changes are expected that will slow down this sharp rise in average home prices in the UK. The first change is the government ending all its incentives, like the income support scheme for self-employment, the furlough scheme, reduced stamp duty, and reduced VAT for businesses. This will mean that the rate of increase in the house prices cannot be prolonged since it’s too much and expensive, so it will have to slow down.

Did the Stamp Duty Reduction Play a Big Role in the Sharp Increase of House Prices in The UK in 2021?

Yes, it did. Before the announcement of the extension of the stamp duty reduction, the increase of house prices was going down by February 2021. But when the announcement for the extension was made in March, the increased prices started to peak again. This means that even if there were slight increases in the previous months, this government incentive played a significant role in the abnormal skyrocketing of house prices up to June 2021. By the end of September, when it neared the extension’s deadline, we witnessed the momentum of the price increase drop again but not that much.

The Upward Trend is Still Expected to Continue

Even though the house prices hit the highest with the help of government incentives on rates and taxes, one should not worry if they bought their property during the period. One thing that will push the prices higher is that the demand is still higher than the available housing supply. So generally, there will be an increase in the average house prices just like in the previous months where there was an increase, even without the stamp duty exemptions.

The steady increase is set to continue for the coming years, even with the setbacks brought by the effects of covid-19. With a long-term recovery plan for the economy being in discussions, we may see many changes from the government in terms of incentives that may raise the average house prices even higher, but as of September, the increase in prices is steady compared to June prices. So, in the long run, it won’t be long before the prices hit £300,000.