UK house prices plunge fastest in 12 years: Average home rent 8.3 times of average full-time wage
UK Houses price fall
House prices in the United Kingdom plunged at the fastest rate in 12 years in January. According to the official numbers released by the Office for National Statistics, higher mortgage prices stressed the housing markets more. However, the authorities have not taken the pandemic years into account.
According to the Land Registry, prices fell 0.6 per cent from December. Furthermore, the following 0.4 per cent plunge in December was the steepest monthly drop since 2011, excluding the pandemic years. There was a 6.3 per cent decline in the price growth. It is low compared to the 9.1 per cent annual rise in December 2022. However, recent figures from mortgage lender Halifax show price recovery.
The Bank of England cut rates to 0.1 per cent in early 2020, the onset of the COVID-19 pandemic, due to which Britain's housing market took off. The administration provided households with tax breaks on property purchases. The annual house-price inflation was the highest at 14.5 per cent in July 2022.
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The property market in England is sluggish as the mortgage costs have doubled to around 4 per cent. In late 2021, the Bank of England raised their rates gradually. According to recent reports, the transactions are decreasing, and annual price growth is condensing.
Furthermore, the market downfall has struck private renters with higher prices. The property market in England witnessed the fastest-growing average rent. According to Office for National Statistics, the growth in average rent was 4.7 per cent in the last 12 months to February since the records started in 2016. The Association of Residential Letting Agents stated landlord instructions decreased as tenant demand rose, creating market distress.
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The ONS mentioned the market saw a recovery in housing affordability for homebuyers in 2022 while conditions for renters were decreasing. In England, the average home rent is 8.3 times the average full-time wage, down from a high of 9.1 times in 2021.
Even though it was the highest annual decline since records began in 1997, only the ratios returned to the long-term trend. According to the ONS, affordability increased due to lower average property prices in England and Wales for the year ending in September 2022 and wage increases of £1,800.
(With inputs from agencies)
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