South West homes see biggest price increase

THE price of a typical UK home climbed to a record high of £265,312 in March, according to an index – with prices in the South West seeing the biggest jump of anywhere in England.

The average price has increased by more than £33,000 in the past year, Nationwide Building Society said.

In March 2021, the average UK house price was £232,134.

Property values grew by 14.3% annually – the strongest pace of increase since 2004.

In the South West the average home now costs £300,936 – a year on year increase to March 2022 of 14.4%.

Nationwide said it is becoming harder for homeowners to trade up, with price gaps between different property types moving to a record high.

Robert Gardner, Nationwide’s chief economist, said: “March saw a further acceleration in annual house price growth to 14.3%, the strongest pace of increase since November 2004.

“Prices rose by 1.1% month on month, after taking account of seasonal effects, the eighth consecutive monthly increase.

“The price of a typical UK home climbed to a new record high of £265,312, with prices increasing by over £33,000 in the past year. Prices are now 21% higher than before the pandemic struck in early 2020.

“The housing market has retained a surprising amount of momentum given the mounting pressure on household budgets and the steady rise in borrowing costs.

“The number of mortgages approved for house purchase remained high in February at around 71,000, nearly 10% above pre-pandemic levels. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.

“The continued buoyancy of housing demand may in part be explained by strong labour market conditions. The unemployment rate has continued to trend down in recent months from already low levels. Wage growth has accelerated, though it is running below inflation.

“The significant savings accrued during lockdowns is also likely to have helped prospective homebuyers raise a deposit. We estimate that households accrued an extra (around) £190 billion of deposits over and above the pre-pandemic trend since early 2020, due to the impact of Covid on spending patterns.

“This is equivalent to around £6,500 per household, although it is important to note that these savings were not evenly spread, with older, wealthier households accruing more of the increase.”

But he warned the housing market would slow in the months ahead as houshold incomes are squeezed and inflation picks up.