18 May 2022
If you are covering the government UK house price index for March today, please see the following comment from Karen Noye, mortgage expert at Quilter:
"The government’s UK house price index for March tells much the same story as other indexes have done for the last few months, which is that the steady march of increasing house prices is coming to an end. They do however still remain extortionately high. The average house price in the UK increased by 9.8% in the year to March 2022, which is down from 11.3% in the year to February 2022.
"With inflation now sitting at 9% as of this morning and people suffering with the worst food and energy price hikes for decades it is likely that house prices will continue to drop. However, whether they drop low enough to make the prospect of homeownership a remote possibility for ‘generation rent’ still remains unlikely.
"At the weekend, Secretary of State for Levelling Up, Housing and Communities, Michael Gove, attempted to address what the government is going to do to help first time buyers. One of the potential solutions tabled was the introduction of a Canada-style insurance policy against defaulting in order to get lower mortgage rates which would help boost home ownership among those with small deposits. Although this seems to be in early stages.
"We have seen time again government housing schemes falling very far from the mark even if well-meaning. A good example is Help to Buy, which has for some been disastrous and contributed to lining the pockets of housebuilders while not actually helping as many people as hoped.
"However, Gove did touch on a very important solution, which is building new homes in areas that people actually want to live rather than soulless out of town developments. Doing this would be far more powerful than tinkering around with ways to help people finance their first home. Although this point does need to be addressed the problems young people and renters face across the nation are akin to Frankenstein’s monster with every housing policy or proposal ultimately making the beast harder to tame. A good example of this is the stamp duty holiday which did very little to help first time buyers bar putting house prices even further out of reach. The only tried and tested way of helping people buy their first home is by sticking to the laws of supply and demand. Simply put if you build more desirable houses, prices come down and people have a fighting chance of getting on the housing ladder.
"The UK is facing a severe financial problem and while the housing market managed to overcome the immediate problems of the pandemic it may not fare so well in this economic climate."
