INDUSTRY NEWS 5
UK house prices now exceed pre-crisis levels
House prices across all English cities have surpassed the 2007 peak for the first time since the financial crisis, according to Zoopla UK.
Its latest Cities House Price Index has revealed that the annual rate of house price growth across all UK cities is close to a three-year high (33 months), with price growth “pegging level” at 3.9 per cent from December 2019 to January 2020. A pick-up in the headline rate of
growth was reportedly bolstered by increased growth across southern cities, following a period of broadly flat price performance over 2019. All cities except for Aberdeen (which
stands at -4.3 per cent) recorded annual house price inflation of at least 2 per cent per annum, for the first time since February 2017. City growth is led by highs of +5.9 per cent in Edinburgh, and +5.3 per cent in Nottingham and Leicester. Central London was the first market
where prices surpassed 2007 levels, with average values reaching their pre-crisis peak in two and a half years. Zoopla argues that prices were buoyed by overseas buyers entering the market, attracted by a drop in the value of sterling. London’s return to form was closely followed by southern cities, which returned to pre-crisis levels within seven years, boosted by rising demand and employment growth. Zoopla’s data also shows how demand
is outstripping supply. The stock of homes for sale is shown to have risen by an average of 2.6 per cent year on year in January 2020. This contrasts with a bounce in demand, which was up by 26 per cent over the same period, and is reflected in data for mortgage approvals which shows demand up 5 per cent in December 2019 compared to a year earlier. Despite the apparent upsurge in supply
at a national level, stock levels in nine cities are reportedly tracking lower than a year ago by as much as 6 per cent. Commenting on the latest report,
Richard Donnell, research and insight director at Zoopla, said: “It has taken 12 years for house prices in all English cities to return to their previous pre-crisis levels. Some cities returned to 2007 levels within four years, as the economy and job growth rebounded. In others, it has taken much longer as the mismatch between demand and supply has been less pronounced.” He continued: “The Budget is a prime
opportunity for the new Chancellor to address some of the factors affecting the housing market. Any review of stamp duty charges to help the movement of homeowners up and down the property ladder should be made to boost transac- tion levels, but the extent and nature of any reform, which must be balanced against political exigencies, remains to be seen.”
New Chancellor of the Exchequer Rishi Sunak has delivered his first Budget in the midst of the coronavirus outbreak, featuring an extension of the Affordable Homes Programme (AHP) and a £1bn fund to remove “unsafe cladding.” £12bn will be released with the new AHP settlement, which reportedly represents a rise of £3bn on the previous plans.
A £1bn Building Safety Fund was also
announced, intended to ensure that “all unsafe cladding is removed from every building over 18 metres.” Alongside these measures, the Chancellor spoke of a £400m fund for “ambitious mayors” for use in brownfield sites, and a nearly £1.1bn allocation for the Housing Infrastructure Fund. For councils, the Government revealed it is set to cut interest rates on lending for social housing by 1 per cent, and that £650m will be spent tackling rough sleeping. For the wider economy, the Chancellor predicted it will grow 1.1 per cent this year, not taking into account the impact of coronavirus, with an inflation forecast of 1.4 per cent this year, increasing to 1.8 per cent in 2021-2022.
In terms of environmental measures, a plastic packaging tax is reportedly set to come into force from April 2022, with which manufacturers and importers whose products have less than 30 per cent recyclable material will be charged £200 per tonne. He also announced £120m for commu-
nities affected the recent flooding, £200m for flood resilience, and that the total investment in flood defences will be doubled to £5.2bn over the next five years.
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2020 Budget confirms new money for housebuilding
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