Property Prices Going Up

It’s been a funny old couple of years in the world of property prices. Not too long ago all the forecasts said that house price were likely to fall in the months ahead. Over the last year, however, we’ve seen property price rises of 20% and even 30% in some areas.

So the question many people would like to know the answer to is: Can house prices carry on going up?

Here we’ll look at a few reasons why we think, yes, they can.

#1 Money with which to buy property is cheap. Even when interest rates go up, which they inevitably will, it will still be very cheap – the interest rate is unlikely to exceed 1% any time soon.

Markets are pricing in a rate rise from 0.1% to 0.25% at the end of 2021, with a second rise to 0.5% in Spring 2022, hitting 1% by the end of 2022.

#2 There’s plenty of money available to lend and lenders have the appetite to lend it.

#3 Some parts of the country are still pretty cheap in the scheme of things. Recent stats that show prices are rising faster in the north than the south tend to support this. Some places have a lot of catching up to do.

#4 The Government’s levelling up agenda promises increased investment, which is likely to boost the housing market in the areas that benefit from it. The so-called Red Wall areas could particularly benefit …. and these tend to be generally cheaper areas where there is potential for prices to rise fastest.

#5 Inflation is a player in the game, for the first time in many years. Rising prices make property look  good value. And a good investment compared to savings. And rising wages in response to rising inflation could add more fuel to the property market.

#6 Construction costs are rising, due to fast rising materials costs. That’s going to make new houses more expensive to build and push prices up. Costlier new houses are likely to have a direct impact on the existing housing market.

Housebuilder’s costs on the rise (

#7 Consumers’ interest in buying and moving and motivation to do it is as strong as ever, if not stronger. People are looking for more space and at different places to live to suit modern lifestyles and ways of working.

#8 There’s a housing crisis with more demand for homes than supply.

#9 New housing targets are still falling well below the amount needed to fill the gap at circa 240,000 new houses versus the 350,000 actually needed.

How large is the housing gap? – Full Fact

#10 Planning reform appears to be some way off, if it happens at all. The planned reforms to planning laws are suggested as one way to boost housing supply and so keep prices under control. However, they’re dragging and it’s likely to be some years before they lead to significant new supply.

#11 Government policy, during and since Covid, suggests a buoyant housing market is a priority and it won’t be allowed to fail or stagnate. There will be a General Election in only around two or three years maximum.

Planning Reforms: Government Will “Look Again” at Proposals | Homebuilding

At Property Insider we have absolutely no interest in talking up property prices. Rising property prices seem attractive on the face of it in that they make everyone feel wealthy, and more confident about buying or investing. But unless you are exiting the market permanently they make it harder and more expensive to move up the ladder and they close the market to new buyers. And these are these are both things that can ultimately slow down housing markets and cause prices to fall rather than rise. It seems however that there’s still some way to go before this point is reached.

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