Property prices are going up – and not just in the UK!
If you are reading this and take an active interest in the property market, you will probably be very aware that prices have been going up. This growth has occurred in more rural areas over the past 12 months, however, this may be starting to change as city centers come back to life.
Hometrack, which focuses mainly on cities, has reported that prices have grown at 7.3%. Over the past 18 months, we had seen a short-term shift to more rural areas performing better than cities as people had moved away due to the covid-19 pandemic. This city center growth has come as a surprise to some who had believed that people would remain out in the suburbs once the pandemic was over. This is proving to be incorrect.
Liverpool has seen the fastest growth of 8.9% year on year. Belfast came in second followed by Manchester. London can be found at the bottom of the table alongside Aberdeen.
Although many will feel as though this is just the UK with extreme house price growth, the Financial Times reported that among the 30 wealthiest countries on earth the average house price growth was 9.4% over the past 12 months. So, although many believe that our growth in the UK is purely down to incentives such as the stamp duty holiday, there is evidence to suggest otherwise!
The main reasons given in the article for the growth across the other nations include low-interest rates, monetary policy, money printing in response to the covid 19 crisis, and the threat of rising inflation. For example, the USA has reported growth of over 15% year on year. This is double what we are experiencing here in the UK however when we remember that the stimulus created by the US was significantly more than ours, it is not surprising. The US increased its money supply last year by approximately 25% in comparison to our 15% in the UK.
All of these factors would lead us to think that we could be at the beginning of a huge boom cycle that will last several years, not only until September when the stamp duty holiday stops!
As investors, we need to be aware of the macroeconomic environment that drives asset prices upwards so we can take action and benefit from the circumstances!