Hometrack and Zoopla recently published their latest house price index data for 2020.
According to the report, the UK’s annual house price inflation for 2020 was 4.3%. Out of all countries within the UK, Wales saw the highest growth at 5.3%. Liverpool experienced the highest rate of growth of any city in the UK at 6.3%, with Manchester close behind at 6%. London’s growth rate came in at 2.9%.
Across the following four regions – the North East, North West, Yorkshire and the Humber, and Wales – house price growth is at its highest rate in over a decade!
The report also states that the lack of affordability is having a significant negative impact on the growth rates of property in southern regions.
The report argues that the “third lockdown is exacerbating a supply/demand imbalance in housing”. This is because, although demand has rebounded fast, the flow of new supply is slower as sellers are reluctant to list their homes while restrictions remain in place. It is also worth noting that the supply of newly built properties also dipped in 2020 due to the pandemic and construction issues. London was the only region to register more supply. It is thought that people were quicker to move away from London given the higher cost of living there. The report also suggests that investors are selling certain London properties in their portfolios as they are no longer as profitable due to the Section 24 tax changes that have been phased in since 2017.
It is also important to note that Zoopla has seen a 13% increase in demand for new homes in the first 2 weeks of 2021. However, there has been a 12% reduction in properties being listed for sale.
Reports such as this are important for investors as they help us to understand that not all areas in the UK are performing equally. We want to be aware of all of these trends when identifying what investments to buy and which strategies to implement in 2021.