Long-term homeowners could be sitting on a property goldmine as the average price of a home across Britain’s towns and cities in the last 20 years has soared by nearly 80 per cent, or nearly £100,000, new data reveals.
Out of 50 towns and cities, Manchester has seen the biggest jump in prices in the two decades of this century, with the average cost of a home jumping by 143 per cent from £73,910 to £179,537.
Leicester has taken second place for the biggest rise in average house prices since 2000, seeing an increase of 132 per cent, with prices rising from the £82,118 mark to £190,440, according to Ocean Finance, which used Land Registry figures.
The Office for Budget Responsibility thinks that house prices will fall next year, and then continue to increase in the following years as the country recovers from the fallout of the Covid-19 pandemic.
On the up: Average property prices in places like Manchester have soared since the year 2000
In the last 20 years, Southend-on-Sea in Essex has also seen a major rise in average house prices, with the cost of a home jumping 117 per cent from £132,239 to £287,173, according to the research.
The research suggests some of the regional cities are catching up with London, where workers have found it increasingly difficult to get on or move up the housing ladder in the last decade. Price have rockered here too – but starting from a much higher level.
In the capital, the average cost of a home has increased by a hefty 116 per cent from £364,366 to £786,760 in the last two decades, putting the capital out of reach for many.
Bristol is known as a property hotspot now, as over the last 20 years the average cost of a home in the city has risen by 112 per cent from £137,742 to £291,839. In highly sought after areas in the city, average prices are significantly higher.
Kingston upon Hull, Cambridge, Brighton, Derby and Coventry have also made it to the top ten urban locations seeing the biggest jump in house prices since 2000, having all have seen average prices increase by at least 95 per cent.
Surging: Average property prices in Manchester have risen by 143% since 2000
All change: Back in the year 2000, Labour was in government and Tony Blair was PM
According to the findings, terraced homes have seen the biggest rise in average prices across 50 towns and cities in the last 20 years, followed by semi-detached homes, detached properties and flats or maisonettes.
Sarah Neate, editor at Ocean Finance, said the analysis revealed how many areas in the north of England, like Manchester, have become ‘more desirable’ and hotspots for prospective buyers and property investors in the last two decades.
This may be a good thing for some, but it is also leaving an increasing number of prospective buyers, particularly first time buyers, priced out of the market.
The slowest regions for property value rises were the north east of England and northern Ireland, the findings added.
In the early 2000s, the property market fared well amid an ample supply of cheap credit, a growing population and a drop in the number of homes being built.
The global financial crash of 2009 brought the boom to an end and housebuilding during the recession fell to its lowest level since the peacetime years of the early 1930s.
What’s happened to house prices this year?
Recent figures from the Office for National Statistics revealed that house prices across the country increased by 4.7 per cent in the year to September, up from a 3 per cent rise in the year to August.
This means, according to the ONS, that the average cost of a home across the entire country stands at a record high of £245,000. London’s average house prices hit a record high of £496,000 in September.
After being given the green light to get moving again by the Government, the property market has been buoyed by a combination of the release of pent-up demand and Chancellor Rishi Sunak’s popular stamp duty holiday, which is expiring at the end of March next year.
Rising: The cost of a home in Britain has increased this year amid the stamp duty holiday
The stamp duty holiday takes transactions up to £500,000 out of stamp duty altogether until March 2021, with higher priced transactions benefitting from a tax cut of £15,000 on the first £500,000 of the price.
In its latest report, the Office for Budget Responsibility, said: ‘House prices fell briefly as the pandemic struck, but recent indicators suggest they have subsequently recovered quite strongly.’
It added: ‘The Halifax and Nationwide measures of house prices, which are based on mortgage approvals rather than completed transactions (and therefore lead the ONS measure), rose by 7.5 per cent and 5.8 per cent respectively in October suggesting that house prices will remain buoyant in the near term.’
What will happen to house prices next year?
While average property prices have jumped markedly this year, the ‘mini boom’ is not expected to last for too long.
In its latest report, the OBR said: ‘House prices are expected to fall back in 2021, driven by end of the stamp duty holiday and the hit to household incomes from the labour market adjustment that we assume will follow the end of the CJRS.
‘Despite a steady recovery from 2022 onwards, the level of house prices remains around 17 per cent lower at the forecast horizon compared to our March forecast.’
Forecasts: The OBR thinks average house prices in the UK will start to fall next year
It added: ‘Due to forestalling, we expect the number of transactions to rise sharply in the first quarter of 2021 and then drop off sharply in the second quarter of 2021.’
Experts at the EY Item Club think average house prices will be 5 per cent lower by the middle of next year than they are now.
Howard Archer, chief economist at the EY Item Club, said: ‘The EY Item Club suspects current robust housing market activity and firming of prices will prove unsustainable sooner rather than later.
‘October’s slowdown in the month-on-month increase reported by the Halifax and November’s dip in asking prices reported by Rightmove hint that prices at least may be starting to come off the boil.’