In a surprising turn for the UK housing market, house prices have surged at their fastest rate in nearly two years, despite ongoing economic challenges. According to new data, the property market has seen a sharp 5.6% year-on-year increase in house prices, raising eyebrows across the industry as affordability pressures continue to mount.
Many experts are surprised by the surge, given the economic backdrop of rising interest rates, inflation, and cost-of-living concerns. While these factors were expected to dampen market activity, the housing sector has proven resilient.
Analysts attribute the price jump to limited supply and strong demand, particularly in key regions such as the South East and Midlands.
Daniel Austin, CEO and co-founder at ASK Partners, said, “we are continuing to see a month-on-month rise in house prices, which is hopefully the sign of an upward trend developing for the rest of the year. The market certainly appears to be showing signs of resilience. Everyone is waiting in anticipation of what the new government will do to drive the construction of new homes and unlock the planning system. It is likely that initiatives announced in the coming months will give the market a further boost.
A report from Nationwide highlighted that this unexpected growth is the highest recorded since late 2022, defying expectations that house prices would stagnate or decline in 2024.
“This upward trajectory has been driven by the chronic undersupply of housing, combined with the enduring demand for homeownership,” a Nationwide spokesperson said.
Meanwhile, industry insiders remain cautious. Rising mortgage rates and economic uncertainty are still creating barriers for first-time buyers and putting pressure on existing homeowners.
Tom Brown, Managing Director of Real Estate at Ingenious, said, “today’s data shows that the resilience and appeal of the UK property sector persist. Though we have seen higher inflation and sticky borrowing rates, we welcome the BoE’s recent rate cut, which will hopefully be the start of the much-needed falling rate cycle.
However, despite these headwinds, the market shows no signs of slowing down just yet.