If you’re one of the thousands of people looking into buying a new home, you’ve likely noticed new and rapidly evolving changes in the housing market. From houses selling overnight to a large exodus from cities, home prices are rising higher than ever before. These industry changes are directly correlated with the Covid-19 restrictions that were initially put into place in March of 2020. Or, could it be due to growing home inflation, decreasing wages and an increased demand for space since the beginning of the pandemic? Whether it’s due to the pandemic, or Brexit, this article delves into some basic statistics from 1989-2021 that will help you as a potential homeowner (and UK citizen) make better purchasing decisions.
House Prices Are Increasing
While browsing through properties online you’ve probably seen house prices increasing on a month-by-month basis. In fact, they have grown at an astounding rate. Housing prices have jumped 11.8% from 2020-2021; a raise with such magnitude that it hasn’t been seen since 2006, just before the Subprime Mortgage Lending Crisis of 2007-2008. After nearly 5 years of price depreciation, it appears the consequences of nationwide regulations, the limiting of incoming supplies and new ‘work from home’ cultures, have created an increased demand in houses so high that builders and estate agents can’t keep up.
If we step away from the housing market and look at the economy, it tells us a similar story of what’s happening across the UK. According to Statista, the UK has seen another record jump in CPI inflation from 2020-2021.
With a variety of factors that have played into this, evidence shows that after nearly a 4-year deflation, the UK has countered almost 10 years of progress in just 1 year; skyrocketing inflation upwards of 5% on the year. This statistic is something yet to be seen since 1989. What does this mean as a homebuyer? The cost of food, living supplies, services and utilities will all increase; limiting the amount of money you can spend on your new home. Fortunately, you can curb a lot of these expenses by using home setup and change of address services like SlothMove. Home technology platforms like theirs can cut your moving expenses in service updates and utilities by hundreds.
Compounding on the issues of rising home prices and growing inflation rates; is a prospective home buyer’s growing inability to purchase what they were once capable of affording just a few years ago. In the same year that home prices and inflation have jumped, the average UK salary has actually declined for the first time since prior to 1999, according to Statista.
This data suggests that not only are prices around the UK increasing, but the average UK citizen is losing a significant amount of their purchasing power with no fault of their own.
If you’re looking to purchase a home in the coming months or year, these hidden expenses can be a real thorn in your side. As a prospective buyer, keeping these metrics in mind can save you loads of regret from an uneducated decision. And do keep in mind, it isn’t all doom and gloom. Despite the statistics above, home sales and building rates are at an all-time high. People across the country are moving every day, and you can too. Prices may have increased, but there are housing options that are still affordable with almost any full-time salary. A great way to understand whether you can afford a new home is by contacting your local real estate agent. Agents can give you advice on the market, hidden costs, and any barriers you might come up against with your potential move.