A typical UK home now costs more than £250,000 for the first time. According to Nationwide, house prices in the UK have risen by 9.9% in the last year.
In October 2021, the average house price was £250,311 in October, up 0.7% on the previous month. On top of this, there has been a huge increase of £30,728 for the average house price since the start of the COVID-19 pandemic. An intense demand from buyers that was unmatched by supply coincided with the global pandemic to create the perfect storm for rising house prices.
Official forecasters say the pace of house price rises will slow. Nicky Stevenson, managing director at estate agent Fine & Country, commented: “the dynamics of the housing market may be about to shift slowly once again, but make no mistake, the boom still isn’t over.”
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House Prices Will Continue to Rise, But At a Slower Rate
The Office for Budget Responsibility (OBR) – the government’s official and independent forecaster – has said that over the coming years, house prices will continue to rise, but at a slower rate.
This surge in house prices particularly impacts first-time buyers. Those looking to buy a property for the first time will have to pay ever-rising costs. As many first-time buyers borrow to afford their first-home, they cold find themselves in an even more difficult position if the cost of borrowing also rises.
The OBR has released its predictions for the changes in house prices. They predict that house prices will go up by 8.6% this year, compared with a year earlier. The annual rise would then slow to 3.2% in 2022, before decelerating further to 0.9% in 2023, it said.
This would be followed by rises of 1.9% in 2024, 2.9% in 2025, and 3.5% in 2026, although longer-term forecasts and more difficult to make accurately.
OBR Predictions for House Price Rises