One million UK homes jump by 50% in value since 2020 — up by £117,400 on average

Yahoo

2 days ago

One million homes in the UK have seen their value increase by 50% or more since the pandemic five years ago, with an average gain of £117,400, according an analysis by property platform Zoopla.
The property website's research, released on Thursday, found that eight in 10 UK homes grew by by more than 5%, an average increase by £60,800.
Zoopla said that UK house values had increased by an average 20% since 2020, with some areas experiencing more significant growth than others, despite a drop in buyer demand in 2023 due to higher borrowing costs in 2022.
More than half of the homes that have seen their value increase by 50% or more in past five years are located in the North West, Yorkshire and the Humber and Wales, with average gains of £77,100, £86,200 and £90,700, respectively.
Zoopla said this growth could be attributed to a number of factors, including shifts in what buyers require from a home prompted by the pandemic and lifestyle changes, driving interest in previously overlooked areas that offer better value for money.
Higher rents in cities encouraging first-time buyers to purchase property in more affordable areas was another factor.
South Wales emerged as one hotspot for significant home value increases. Zoopla said that the area "presents a compelling picture where excellent value for money converges with good proximity to Cardiff and the surrounding countryside". The property website said this had driven substantial growth in home values off a low base, with areas like Blaenau Gwent and Merthyr Tydfil seeing three in 10 homes increase in value by 50% or more over the past five years, an average of £49,900 and £51,100, respectively.
In the North West, Zoopla found that urban areas around key cities such as Liverpool and Manchester had also seen significant growth. For example, homeowners in Rochdale, Oldham (both bordering on Greater Manchester) and Bolton were more likely to have seen property values surge by 50% over the past five years, by an average of £64,300, £62,900 and £64,300 respectively.
Zoopla's research showed the sizeable value gains seen in the north were less common in the south. Half of homes in the south grew in value by less than 20%, with the average increase ranging between £47,700 in London and £62,000 in the South East.
Just 2% of homes in the south saw a rise in values of 50%, averaging at over £200,000 or more.
Zoopla said: "A significant proportion of homes in the south that did experience substantial value growth tend to be concentrated in desirable coastal destinations and areas of natural beauty, such as the Isle of Wight where homes with 50% gains have seen average value changes of £182,400 in the last five years."
In London, meanwhile, 13% of homes experienced falls in value of 5% or more, an average decline of £34,000. Zoopla found that these losses were primarily concentrated in inner London borough, particularly Westminster and Kensington and Chelsea, where close to half of homes are now valued below their June 2020 estimates.
"This trend reflects the many challenges facing the capital, including exceptionally high prices that impact first-time buyer demand, elevated mortgage costs and tax changes that have discouraged landlords from buying property," said Zoopla.
More than half of homes in Aberdeen, Scotland, had also fallen in value, by an average of £25,700, which Zoopla said could by largely attributed to a smaller oil and gas industry in the North Sea.
Richard Donnell, executive director at Zoopla, said: "Home value growth has been weaker across southern England and particularly in London. A combination of high prices and higher mortgage rates have reduced buying power and this has been reflected in flat prices and modest price falls in inner London."
'The UK currently has the most homes for sale in seven years," he said. "Its critically important serious sellers fully understand the local market dynamics impacting the value of their home and seek the advice of agents on where to set the asking price for their home in order to achieve a sale."
Nathan Emerson, CEO of Propertymark, said: "This rise in house prices is positive for homeowners, especially when considering the current condition of the economy.
Read more: First-time buyers on £30k salary now able to apply for mortgage
'However, for first-time buyers, this presents the potential for further restrictions such as increased costs, affordability challenges and greater competition from other buyers, which could drive up prices even further."
"Even with mortgage providers introducing more competitive mortgage deals, help for first-time buyers is needed as house prices continue to rise," he said. "This has pushed the average deposit needed to over £70,000, which is likely to be unrealistic for many people."
As part of financial regulation reforms unveiled this week, chancellor Rachel Reeves announced that she was cutting red tape to boost home ownership. This meant that more mortgages would be available at over 4.5 times a buyer's income, following on from Bank of England recommendations.
This change meant that Nationwide will be able to make its "Helping Hand" mortgage available to people with lower incomes. From Wednesday, eligible first-time buyers were able to apply for a mortgage with a £30,000 salary, down from £35,000, and joint applicants with a £50,000 combined salary — down from £55,000.
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