Could the 'golden period' of house price growth be nearing its end?

Could the 'golden period' of house price growth be nearing its end?

New research from online estate agents, HouseSimple.com, has revealed that UK homeowners have seen the value of their homes increase by more than 40% and almost £60,000 over the past eight years, as they’ve benefitted from a “once-in-a-generation” record low interest rate environment.

According to the report, UK property prices have risen 41.2% since the Bank of England dropped interest rates to 0.5% in March 2009, and then dropped them further to 0.25% in August 2016.  Average prices in Cambridge have almost doubled since March 2009, while average London prices have broken through the £500,000 ceiling.

But this golden period of house price growth could be drawing to an end.

With three members of the Bank of England’s Monetary Policy Committee (MPC) voting for an interest rate rise in June, and inflation steadily rising, we could be close to the first rate rise in almost 100 months.

HouseSimple has analysed how much UK house prices have risen or fallen since March 2009, by looking at average house prices* in 100 UK towns and cities between March 2009 and April 2017. During this period, interest rates remained at 0.5% for over seven years before falling to 0.25% in August 2016, and homeowners across many parts of the country have seen the value of their properties rocket.

The South East has fared particularly well, with seven of the 10 biggest property price rises since March 2009. Cambridge, London and Slough have all seen average house price growth in excess of 90%. However, at the other end of the performance chart, Hartlepool (9% drop), Durham (6.2% drop), Middlesbrough (4.5% drop) - all in the North East - have seen prices fall.


London

Across the Capital, average house price growth has been particularly strong during this unprecedented time of record low interest rates, with prices rising on average 90.8%. The borough of Kensington and Chelsea tops the chart, with average prices increasing by 128.9%, while the less glamorous boroughs of Haringey and Waltham Forest have witnessed impressive price growth since March 2009, with price growth of 111.7% and 106.4% respectively.

Surprisingly, the trendy borough of Camden (74.9%) was one of the worst performing boroughs, although average prices have still grown over 30% more than the UK as a whole.

Alex Gosling, CEO of online estate agents HouseSimple.com, comments: “While UK savers have suffered over the past eight years, millions of homeowners have increased their equity in their homes substantially in this once-in-a-generation low interest rate environment. It’s been a golden period for UK homeowners, but there are signs that it could be coming to an end as the MPC narrowly voted to hold interest rates at 0.25%.

House prices are also under pressure from the political and economic uncertainty of Brexit and the fallout from the disastrous General Election result for the Conservative Party. There is no evidence to suggest that property prices are about to plummet, but homeowners and home buyers do need to plan ahead, and make sure they can cover the impact of interest rate rises on their monthly mortgage payments.

Many homeowners will have never seen an interest rate rise, and may believe rates will never rise. But they will eventually, and when they do, we could see rates rise by 1%-2% quite quickly. With many households already feeling the strain of higher day-to-day costs, monthly mortgage payments going up by several hundred pounds a month could tip them over the edge.”

Join our mailing list:

Leave a comment



Our Next Event

Buy-to-Let Roadshow July 2017

Buy-to-Let Roadshow July 2017

Newcastle - 18/07/2017

Bolton - 19/07/2017

Derby - 20/07/2017

Reading - 21/07/2017

Register now

Latest Comments

jason hadzikostas
jason hadzikostas 28 Jun 2017

The most important thing is a budget. Students have to manage their spendings in food, house maintenance, books and many other things. According to me, student Studios are the perfect option for them as...

view article
SecomTech
SecomTech 22 Jun 2017

AT Last...This was discussed years ago and there was a move towards landlords registering their bad tenants on a database..(can't remember where) It seems a logical step though our leaders will probably...

view article
Bertrand
Bertrand 02 Jun 2017

How about the Welsh Govt introducing a scheme to protect landlords against "rogue" tenants who are then taken to court for criminal damage to the properties they trash. Pretty unlikely I suspect and politically...

view article
AmberMorris
AmberMorris 25 May 2017

"Please don't pick a novelty tune-playing doorbell. They're not 'fun'. They're stupid." Laughed a lot to this. It's actually true, though.

view article
Oliver Conway
Oliver Conway 18 May 2017

Making a neat inventory is a good idea, but if the seller is not willing to provide it, can the buyer demand it?

view article
Bertrand
Bertrand 17 May 2017

First step to nationalisation of the private rented sector IMHO. Nanny state poking their noses into things yet again. I object, as a decent landlord, sometimes having to deal with some pretty awful tenants,...

view article
Izzy
Izzy 16 May 2017

This is such a great a post. I love the detail you've gone into. It's a very useful article for helping those who are looking at deciding which sector they would like to go into! When I first started investing...

view article
paul burnham
paul burnham 30 Apr 2017

Jeremy Corbyn's pledge that a Labour government would build 500,000 new council houses must electrify the general election campaign. Reliance on markets and the profit motive has brought huge housing-related...

view article
CommercialTrust
CommercialTrust 28 Apr 2017

Sadiq Khan?s announcement of an online database of landlords and letting agents who have been convicted of housing offences, appears on face value to be a variation of the already implemented Database

view article
warren
warren 26 Apr 2017

You're very welcome Mary! Glad you enjoyed them :)

view article
Mary Ward
Mary Ward 26 Apr 2017

Thank you for the wonderful ideas. First impressions can make or break a deal. It's sadly that many homeowners drop the kerb to create an off-street parking space.

view article
Tony Gimple
Tony Gimple 14 Apr 2017

I'm not at all surprised that so many landlords are still confused about what the tax changes really mean and how it will affect them. In particular, the blind rush to incorporation is leaving landlords...

view article

Related stories

More articles from Property

Buy-to-Let Roadshow
July 2017

18th-21st July

4 days
7 specialists
4 locations
Free to attend

Click here to register now