House Price Trends: Key Insights for Buyers and Investors
House price trends are often considered one of the most important indicators of the health and strength of a property market. However, it’s not just the national averages that matter, but the performance of specific regions and cities within the country. Understanding where house prices are rising or falling, and why this is happening, can provide valuable insights for prospective buyers and investors.
Various agencies, such as Zoopla, Rightmove, Nationwide, and Halifax, publish monthly house price indices. These indices provide an overview of trends in the UK property market. These indices build a picture of property values, helping homeowners and investors make informed decisions. Generally, house prices have risen gradually, though economic factors can cause fluctuations.
The Impact of the COVID-19 Pandemic on House Prices: House Price Trends
The COVID-19 pandemic had a significant effect on house prices across the UK, triggering an unusual surge in the market. The disruptions caused by the pandemic, including repeated lockdowns and social distancing measures, led many people to reassess their living situations. For some, this meant purchasing a larger home or moving out of congested city centres into more spacious properties in suburban or rural locations.
The introduction of the stamp duty holiday, which ran from July 2020 until September 2021, also spurred many buyers to act quickly. This temporary tax relief helped many people save money on their purchases, which, in turn, boosted demand for housing. The subsequent rush for property caused house prices to soar. Data from Halifax shows UK house prices rose by £48,620, or 20.4%, between January 2020 and December 2022. This growth far outpaced the long-term average, which typically sees annual increases of around 3-5%.
In the three years prior to this period, house prices increased by just 7.8%, demonstrating that the pandemic period was an anomaly in terms of price growth. The economy began to adjust to the post-pandemic world, causing a natural market correction after the rapid increase in house values. Rising inflation, increased interest rates, and a cost-of-living crisis have affected housing affordability. As a result, price growth has moderated.
The Post-COVID Market and Regional Performance
As the world adapted to life after the pandemic, the housing market began to stabilise, and house price growth has returned to more manageable levels. However, the dynamics that drove the market in the first place—such as the desire for more living space—are still influencing trends, although to a lesser extent. People are now valuing location more than before. This shift contrasts with the “race for space” during the earlier pandemic phase.
Cities and urban centres are seeing stronger growth once again. As more people return to offices, demand for property rises. Some areas continue to outperform others in house price growth. Notably, northern England has outperformed the south in recent years.
Regional Trends: The North vs. The South
The UK housing market has a north-south divide. House prices in the south, especially London and the South East, are generally much higher than in the north. In recent years, the north of England has seen stronger house price growth. Affordability and changes in buyer preferences drive this.
Affordability has become a critical consideration for many prospective homebuyers, particularly as the cost of living continues to rise. For many people, especially first-time buyers, the high price of properties in the south of the UK makes purchasing a home there an unattainable dream. In contrast, the north offers more affordable options, and this has encouraged a shift in buying patterns. The rise of remote working has allowed people to live in previously unreachable locations. These areas were once limited by distance from London or other major economic hubs.
According to predictions from property consultancy Savills, affordability will continue to be a significant factor in the housing market for the foreseeable future. Mortgage rates remain high compared to pre-2022 levels. As a result, many buyers will seek more affordable areas, driving growth in northern regions.
Predictions for Regional House Price Growth
Savills’ latest forecasts suggest that the northern regions of the UK will continue to see the strongest house price growth over the next few years. Specifically, the North West, North East, Yorkshire and the Humber, and Scotland are expected to experience solid price increases. In 2025, house prices in these regions could rise by as much as 5%, with some areas seeing even higher growth depending on local factors.
In contrast, areas in the south of England will see more modest growth. The South West and East of England are forecast to see a 2.5% increase in house prices. Meanwhile, London and the South East are predicted to experience slightly better growth at 3%. This slower growth in the south is largely due to the higher starting prices in these regions, which leave less room for significant increases.
Long-Term House Price Forecasts: What to Expect by 2029
Looking further ahead, house price growth across the UK is expected to remain relatively strong, but with clear regional disparities. Savills’ five-year forecast predicts the North West will see the highest cumulative growth. Experts expect property prices in the region to rise by 29.4% by 2029. The North East and Yorkshire and the Humber are set to see strong growth, each expecting a 28.2% increase over the same period.
Meanwhile, the southern regions, including London, the South East, and the East of England, are expected to see more modest long-term growth. By 2029, analysts forecast house prices in London will rise by just 17.1%, relatively low compared to northern regions. Analysts predict the South East and East of England will see cumulative increases of 17.6% and 19.9%, respectively.
These predictions are based on overall trends. However, individual areas may perform better or worse due to local factors like infrastructure and economic conditions. Areas benefiting from major investments or transport improvements are likely to see stronger house price growth. In contrast, less-developed regions may experience slower growth.
Identifying Key Areas for Investment
For property investors looking for areas that offer strong potential for long-term capital appreciation, northern England remains a key focus. Cities like Manchester, Liverpool, and Newcastle are all set to experience continued growth, driven by ongoing regeneration projects, increasing demand for rental properties, and rising employment prospects.
Manchester has consistently topped property growth indices due to its thriving economy and expanding transport network. Additionally, large-scale redevelopment projects contribute to its continued success. The city has seen a surge in new homes, especially in the city centre. This trend will continue as strong job markets and vibrant cultures attract people.
Other cities in the North West, North East, and Yorkshire offer excellent investment opportunities. Many areas benefit from government-backed regeneration and improved transport infrastructure. These areas offer the potential for higher yields for investors, as well as long-term capital growth as demand for properties in these regions rises.
Conclusion: House Price Trends
The direction of house prices in the UK is influenced by a complex mix of factors, including economic conditions, interest rates, and changing buyer preferences. National trends provide valuable market insight. However, buyers and investors must also pay attention to regional variations and localised trends.
Affordability remains a major concern for many buyers. As a result, northern UK regions will outperform the south in house price growth. Areas with strong economic fundamentals, like Manchester and other North cities, offer excellent opportunities for investors. These locations promise long-term capital appreciation.
RedCardinal can help you today with property investment opportunities in the UK’s top regions. We’ll help you explore our current and upcoming projects.
