Annual house prices began rising on a national level in March, but London and the South East had remained firmly in contraction territory, with sale prices falling by 3.6pc and 0.5pc year on year in April respectively.
But now a combination of wage growth, stabilised mortgage rates and lower house prices mean even these regions are starting to recover as they become more affordable.
The average house price in London has fallen from a peak of 11.1 times the average local salary in spring 2022 to 9.9 times in spring this year, according to separate data from Nationwide.
Anthony Codling, analyst at RBC Capital Markets, said: “Wages are rising, cost of living pressures are easing and even in May there was optimism that a Labour government would be pro-growth and they were well ahead in the polls.”
Mr Codling said: “With the prospect of a Bank Rate cut in September, we expect house prices to move up – not down – in the coming months.”
Elliott Jordan-Doak, an economist at Pantheon Macroeconomics, said: “We think house price gains should accelerate again with rates falling and real incomes rising continuously.
“All told, we think that house prices will gain 3pc in 2024. But May’s official house price index suggests risks of a larger rise.”
New inflation data showed the Consumer Prices Index (CPI) rose by 2pc in the year to June. This was in line with the Bank of England’s target rate, but price growth is expected to accelerate later this year, meaning investors are not expecting an interest rate cut until the autumn.
Ten of the best streets to live on in the UK have been identified by estate agents and they aren’t all extremely expensive. The average house price in the country was £282,000, according to the latest government figures, and £2,000 lower than the previous estimate.
MailOnline has produced a list of the 30 best streets to live in based on property experts and estate agents’ recommendations.
Towns and cities as far afield as Nottingham, Hexham, Swansea, Shaftesbury and the Isle of Mull feature on the list, with average prices ranging from £160,000 to more than £2million.
Parkside in Wollaton, Nottingham, has an average price of £650,000 and is identified as a prime address thanks to how close it is to good schools, its welcoming neighbourhood feel and proximity to historic Grade I-listed Wollaton Hall.
Elvaston Road in Hexham, Northumbria, also appears on the list, and is described as a “very attractive street” packed with post World War One housing. Ryan Eve, a director at Finest Properties told the Mail it is positioned near the town centre and is in walking distance of “very good schools”. The average house price here is £451,000.
Gold Hill in Shaftesbury, Dorset, is remembered by some as the location for the famous Hovis ad, featuring a delivery boy pushing a bike up this steep street. With its views over the Dorset countryside, it’s perhaps no wonder the average price here is £328,000.
Mayals Road, Swansea, has an average house price of £404,000 and is seconds away from Swansea Bay. This street is hailed for its proximity to the village of Mumbles and for being on a main road towards the scenic Gower Peninsular.
Forming the backdrop to the BBC drama Balamory, The Main Street in Tobermory, Isle of Mull, is an attractive prospect, with an average house price of £160,000.
Cliff Road in Salcombe, Devon, is one of the country’s most expensive coastal resorts. Cliff Road offers “stunning” views of the nearby estuary and North Sands beach is minutes away, making this street the best for your money, according to Charlie Heath, manager of Marchand Petit estate agents.
At the upper end of the scale is Bywater Street in London where the average house price is £2,250,000. This street’s pastel-painted Georgian houses are greatly sought after and often sell without appearing in estate agents’ windows.
Another pricey spot is Rock Road in Rock, Cornwall, where the average house price is £1,880,000. The road’s appeal is largely thanks to the local shops nearby and a golf course not far away, according to Josephine Ashby at John Bray.
Potters Bank is one of Durham‘s priciest roads and boasts a mix of old and new homes. The average price tag here is £370,000. York’s Bootham leads to York Minster and is the birthplace of poet WH Auden. Its mix of Georgian and Victorian homes are minutes from the centre, with an average house price of £325,000.
London, Merseyside and Manchester green belts boast most brownfield sites, with Buckingham, Cheshire and Tandridge the top counties for building potential.
The Merseyside and the Greater Manchester green belt area boasts the second highest number of brownfield sites at 1,968. Birmingham’s green belt came third with 1,351 sites, with South and West Yorkshire close behind with 1,129 sites. Bristol and Bath and their surrounding areas offer 606 brownfield sites.
Could your house price be hit?
The supply of homes in the UK is highly inelastic, which means it doesn’t respond much to changes in demand. This is because it’s very difficult to build homes in the UK because of restrictions on planning and the areas of land that can be built upon.
So if demand for property goes up – as it has for decades – prices follow, and sharply.
Demand for homes is also highly inelastic – people will always want to buy them, even if prices increase substantially. Prices were widely forecast to crash in 2023, with soaring mortgage costs and a cost of living crisis predicted to deter buyers and cause a double digit market fall. Yet prices dipped just 1.8pc over the year, according to Nationwide.
Even if the supply of homes increases at a faster rate, demand for property is so strong – and supply is still so stiff – experts believe there will be little impact on price.
Christian Hilber, professor of economic geography at London School of Economics, said: “Even if the incoming government were to deliver and were successful in creating a building boom, this is unlikely to have a dramatic adverse effect on prices.
“We haven’t built enough houses for 40 or 50 years now – one or two years of a building boom won’t reverse that. We would need a sustained substantial increase in construction over several years to achieve that.
“I think it’s more likely that increased construction numbers will have a small dampening effect on long run house price growth. Welcome in terms of housing affordability, but these are moderate effects rather than dramatic ones.”
However, he added that some parts of the country were more vulnerable to dips.
“If new homes are built in regions where housing affordability is less of an issue – chiefly the North and North East of England, unlike London and the South East – it’s possible that prices there could fall.”
This is because weaker demand for homes may not be sufficient in maintaining strong price growth.
In 2018, he spent €66,000 (£55,670) on a two-bedroom apartment in the Condado de Alhama golf resort in Murcia, Spain.
The plan was to use the flat as a family getaway for him and his two daughters, now aged 11 and 14, and to rent it out in between to cover its running costs.
At first everything worked well.
The family, who live in Bedlington, Northumberland, could jump on a flight from Newcastle Airport, and would visit three or four times a year to relax by the pool and enjoy a round of golf.
Renting the flat out on Airbnb earned “about £5,000 or £6,000” per year – enough to cover bills and maintenance – and it seemed like a win-win situation.
“I thought it might be a good investment too because they were building new flats at the resort,” says Mr Evans, 49 who runs his own travel company, My Local Tour.
Then the Brexit deal was completed and things changed overnight.
“My Spanish taxes went up – as a non-EU resident I had to pay 24pc tax to the Spanish government,” says Mr Evans.
“For me to get the income I needed meant becoming completely uncompetitive compared to the other owners, who are mostly European and were not paying such high tax.
“It was pointless to keep it on the site, because nobody was interested. It just became untenable.”
Last year, Mr Evans decided to sell the flat. It sold for €70,000 to a French couple in May.
“After I had paid all the fees I just about broke even,” he says.
The girls have taken the sale of their holiday home with equanimity.
“They were a bit sad about it but it means we will be able to try out lots of different places, instead of always going to Spain.”
Governments’ own policies bear much of the responsibility for rising house prices, adds Cheshire. It introduced a range of affordable homeownership schemes during the 2010s in a bid to make it easier to get on the housing ladder.
One of them was Help to Buy, which saw the Government give out loans to those wanting to buy new builds, meaning they’d only need a deposit of 5pc of a home’s value.
Cheshire argues that these schemes, which have boosted demand for homes in the face of a relatively fixed supply, bear much of the responsibility for rising house prices.
“If you add anything to demand, prices go up. That’s why Help to Buy was a totally useless and counterproductive policy, and is partly why houses are so unaffordable.”
“The era of cheap money has also played a huge role in driving up prices,” adds Colvile, referring to the historically low borrowing rates offered to homebuyers during the 2010s that made mortgages far more affordable.
The average fixed mortgage rate fell from over 5pc in 2010 to under 2pc in 2021, though has climbed again in recent years.
The toll on renters
Immigrants are more likely to be renters than those born in the UK. Just 47pc of migrants own their own homes, compared to 70pc of those born in the UK.
Those who are foreign-born are almost three times as likely to live in rented homes, according to analysis by the Migration Observatory at the University of Oxford. At least 80pc of new arrivals rent for at least the first few years after they move to the UK, according to previous analysis by the ONS.
There is evidence that immigration has driven up rents. Capital Economics found that in the two years to June 2023, immigration led to an additional 430,000 households wanting to privately rent homes, meaning rents have climbed 11pc higher than they would otherwise have been.
downsizing is exciting – here are the places I would consider
You might consider Uppingham, a market town, famed for the well-known private school. The honey-coloured buildings help to give the town the sought after English charm and it is easy to imagine putting down roots here later in life. The average house price in the town is £392,294.
Alternatively, Kettering, about half an hour up the road, has an average house price of £245,442. With good links to London, and a recently regenerated high street, it can compete with the commuter towns of Surrey or Kent, but at a fraction of the cost.
While these are all good options, and there is certainly value in hunting around, don’t be afraid to think outside of the box.
A grandfather I once met, Brian, lived a bus journey away from his family and travelled every day to do the gardening and help in the house.
The family realised it made sense to provide him something more permanent as an option to stay over if needed, so they built an annex in the garden that was just for him.
To begin with, he used the annex from time to time, but then eventually moved in when it made sense to do so.
Downsizing and then using the money to extend an existing property can be a very efficient use of your money – I have always said it is cheaper to build than buy.
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