House prices have increased by 257%, or 92% on an inflation-adjusted basis, over the last 25 years, according to property firm Savills’ analysis of how the UK property market has performed since the turn of the millennium.
Savills research reveals that the average house price across the UK was £88,466 entering the year 2000, compared with £329,988 today. Back then, house prices were growing fast (13% annually) due to a combination of comparatively low interest rates and the abolishment of MIRAS.
Annual house price growth peaked in January 2003 at 24.8%, before values bottomed out in February 2009, having fallen 21%.
According to Savills, all price growth, after adjusting for inflation, happened in the first five years of the new millennium, given market fluctuations which followed over the next 20 years.
“The stellar price growth that we saw in the first five years of the new millennium sowed the seeds for fundamental change,” comments Lucian Cook, head of residential research at Savills.
“The legacy of the credit crunch, including tighter mortgage regulation, heralded the end of long-term inflation-busting house price growth, leading to lower levels of transactional activity and permanently higher deposit hurdles for first-time buyers.
“This in turn has impacted how we live. Once heralded as a nation of home ownership, owner-occupied households are now in decline, with the private rented sector growing by 141% over the period.”
Regionally, London has experienced the most sustained upward pressure on house prices over the past 25 years, increasing by 357%, presenting buyers in the Capital with a more exaggerated set of circumstances.
The East of England (309%) has seen the second-highest growth in average values, followed by the South West (289%). Northern Ireland has seen the lowest growth across the UK – but average values still risen by 216% over the period.
At a parliamentary consistency level, the list of locations with the highest price growth is dominated by London neighbourhoods – with Walthamstow coming top (652%).
Outside of Greater London, Gorton, followed by Blackley and Broughton, both located in Greater Manchester, saw the most significant price growth. Followed by Bristol South and Hove in the South East.
“The rise of aspirational urban living has led to the likes of Bristol, Bath, York and Manchester outperforming the rest of the UK since 2000. We have also seen particularly strong growth in desirable coastal and second-home hotspots, exacerbated more recently by the ‘race for space’ when Covid-19 hit,” continued Lucian Cook.
Biggest risers over the last 25 years
| Area | Av price | 25 year change |
| Walthamstow | £553,018 | 652% |
| Leyton and Wanstead | £617,604 | 594% |
| West Ham | £463,120 | 590% |
| Tottenham | £548,994 | 560% |
| Lewisham, Deptford | £530,895 | 537% |
| Manchester, Gorton | £238,719 | 537% |
| Hackney South and Shoreditch | £732,549 | 520% |
| Blackley and Broughton | £213,365 | 517% |
| East Ham | £434,399 | 499% |
| Hackney & Stoke Newington | £701,625 | 496% |
| Camberwell and Peckham | £590,170 | 492% |
| Lewisham West and Penge | £526,629 | 491% |
| Bristol South | £339,912 | 489% |
| Dulwich and West Norwood | £736,053 | 481% |
| Hove | £522,268 | 475% |
| Brighton, Pavilion | £492,457 | 472% |
| Brent Central | £613,892 | 471% |
| Hampstead and Kilburn | £1,211,075 | 455% |
| Cities of London and Westminster | £1,805,986 | 452% |
| Barking | £358,218 | 445% |
Source: Savills using Land Registry
First-time buyers have found it increasingly difficult to get onto the housing ladder over the past 25 years. In 2000, the average purchase price was £68,700, but this amount has more than tripled to £255,400.
Higher house price growth and more stringent lending requirements have meant that the deposits alone have risen by 327% (£13,490 then, to £57,568 today). However, income growth has not increased at the same pace, meaning that typical first-time buyer borrowing has increased from 2.24 times the average income to 3.22.
“Rising prices for first-time buyers has been exacerbated by sustained growth in older unmortgaged households and an inefficient occupying of the housing stock at our disposal. Combined with a lack of housebuilding, and higher rental costs, has meant that the number of young adults living with parents has increased from 2.4 million 25 years ago to 3.6 million today.
“This has led to a significant expansion to the so-called Bank of Mum and Dad, with those who can rely on family support finding it much easier to get onto the housing ladder.”
Read the orginal article: https://propertyindustryeye.com/where-have-house-prices-risen-the-most-since-the-turn-of-the-millennium/
