Britain’s house price roller coaster ride: How prices have risen by up to 20 PERCENT since Covid

Soaring inflation following the long-term effects of the coronavirus pandemic and Russia’s war with Ukraine has caused the UK property market to experience a rollercoaster ride over the past three years.

House prices have skyrocketed by as much as 20 per cent in some areas of the UK since 2019 – with the biggest increases in the south-east and south-west of England, Rightmove said.

And the tumultuous journey for homebuyers is set to continue as the Office of Budget Responsibility’s latest projections call for a nine percent decline through the third quarter of 2024.

Meanwhile, young first-time buyers face fears of negative equity — when a home is worth less than an owner who borrowed it to pay for it — after taking out risky mortgages in 2020 and 2021.

House prices have skyrocketed by as much as 20 per cent in some areas of the UK since 2019 – with the biggest increases in the south-east and south-west of England, Rightmove said in December

According to the analysis, up to 90,000 first-time homeowners could be excluded from rescheduling their homes because they ended up with negative equity.

The South West has seen its biggest rise in house prices since 2019, with the average cost of a home rising a massive 20 per cent from £294,000 in 2019 to £353,852 last year, according to Rightmove.

The South East is close behind, with an average house price of £478,188, up 18 per cent from 2019’s level of £403,980.

The most expensive average house price last year was £1.7million in central London. The city as a whole has seen prices rise 14 per cent since pre-Covid times.

At the other end of the scale, the North East has seen house prices rise by just seven per cent since 2019, from £169,894 to £180,984.

However, the OBR forecasts a nine percent decline through the third quarter of 2024, driven by “significantly higher mortgage rates as well as the broader economic downturn.”

That would bring the average house price to around £268,450 and wipe out price increases over the past 12 months.

Forecasts from the Office of Budget Responsibility now see prices falling by £26,550 by summer 2024.

Soaring inflation following the long-term effects of the coronavirus pandemic and Russia’s war with Ukraine have resulted in a rollercoaster ride for the UK property market over the past three years

The average house price in November has already fallen by 1.4 percent month-on-month – the sharpest drop since June 2020.

House price expert Nick Karamanlis, a former director of Stirling Ackroyd, said: “The market stalled during the pandemic when people were unable to buy and view houses.

“But then the market exploded when everyone came back at the same time and the government abolished stamp duty. Demand exceeded supply and 20 or 30 people would be viewing a property at a time.

“Sealed bids came back, not seen in over ten years.”

But he added that the market for the coming year is very difficult to predict.

Nick said: “We are currently in a period of transition. It may be at the beginning of a downturn, but it’s usually very quiet in November and December anyway.

“Six months ago house prices were probably at their peak. They seem to have come down to their corrected level, but we’ll have to wait and see if they fall further next year.’

Nationwide said this week that house prices fell 0.9 percent month-on-month in October for the first time in 15 months and the sharpest drop since the pandemic began

Ahead of the projected price declines, many young homeowners fear they could end up in negative equity.

And mortgage holders in Scotland and northern England are most at risk, according to a freedom of information request to the Financial Conduct Authority.

In Motherwell, Glasgow, for example, 29 per cent of all mortgages in 2021 went to buyers with deposits of 10 per cent or less, the Telegraph reported.

8.4 percent of buyers had a down payment of just five percent – putting them at high risk of negative equity.

Nick, now an east London estate agent who provides advice on TikTok and Instagram, said those most at risk of negative equity are first-time buyers, particularly those who have bought newly built homes as they tend to have one be sold inflated price price.

Meanwhile, other financial experts have predicted that Yorkshire, Lincolnshire and the West Midlands will be in the line of fire.

David Jabbari, CEO of nationwide transport company Muve, said: “House prices have remained high since the pandemic, although Nationwide expects them to fall next year. This is a problem for those looking to sell their home, as selling it for less than you bought it can result in negative equity.

“Negative equity was a feature of the 1990s real estate market, and many will have forgotten how awful it feels to sell a home for less than you paid for it.

“It’s only a problem if you’re selling and not buying another house, as a drop in your selling price is likely to be offset by the deal you can get on the purchase.

“In the long term, as the 90’s generation realized, things are going well because given the UK housing shortage the long term direction of prices will still be upwards.

“Right now it is difficult to predict which areas of the UK are likely to see house prices fall the most. It could be that the areas that have grown the fastest during the pandemic, especially cities outside of London, will be hit the hardest.

“Counties like Yorkshire, Lincolnshire and the West Midlands could be in the line of fire but unfortunately we won’t know until the decline starts to bite.”

The Zoopla home price index forecasts that price growth could turn negative in 2023.

The research found current house price inflation has slowed to 7.8 percent, the slowest growth rate since November 2021, after the October mini-budget brought the housing market to a standstill.

Zoopla real estate experts expect price growth to turn negative as the market adjusts to weaker purchasing power and worries about the economic outlook.

Chancellor Jeremy Hunt said: “The OBR expects housing activity to slow over the next two years, so the stamp duty cuts announced in the mini-budget will remain in place, but only until March 31, 2025.

“After that, I will stop the measure and create an incentive to support the housing market and all related jobs by boosting transactions at the time the economy needs it most.”

On 23 September 2022 the Government increased the threshold above which stamp duty is payable on all residential property purchased in England and Northern Ireland from £125,000 to £250,000.