LATEST: Average property increased in value by £44,138 during pandemic

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The value of a typical property has soared by £44,138 since February 2020 – although analysts predict that domestic and global pressures will dampen future growth.

Nationwide reports that a combination of robust demand and limited stock has kept upward pressure on prices, increasing annual UK house price growth to 12.6% last month.

Chief economist Robert Gardner (pictured) believes the market’s continued buoyancy is a little surprising, given the mounting pressure on household budgets from rising inflation and since borrowing costs have started to move up from all-time lows.

“The economic outlook is particularly uncertain at present,” says Gardner.

“Nevertheless, it is likely that the housing market will slow in the quarters ahead. Indeed, there is scope for inflation to rise even further as events in Ukraine threaten to send global energy prices even higher.

“Assuming that labour market conditions remain strong, the Bank of England is also likely to raise interest rates, which will exert a further drag on the market if this feeds through to mortgage rates.”

Muted

Tom Bill, head of UK residential research at Knight Frank, believes there won’t be a return to more muted house price growth until supply picks up, but says there are signs of that gradually happening.

He adds: “While demand has been unrelenting over the last several months, higher levels of market valuations requested by prospective sellers since the start of the year indicate that supply will pick up, particularly as the spring market arrives.

“We would therefore expect price growth to return to single digits later this year. Meanwhile mortgage rates will inevitably rise and higher inflation, accelerated by the effects of the Ukraine conflict, will start to put downwards pressure on demand and house prices.”

Read the Nationwide report in full.

Read more about the housing market.

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