Everyone knows what’s going on in the British property market right now. Demand has soared, and supply has waned, sending the average price of a house in the UK rocketing to the highest level in history, and making it nigh on impossible for a lot of the population to get on the property ladder.
Some have pointed to a slowdown demand, and therefore in price growth, but according to one of the UK’s biggest mortgage lenders, that’s not happening any time soon.
Nationwide just released its monthly House Price Index, a huge survey of exactly what’s happening in the property market right now, and there’s some worrying news in there for potential home buyers.
On the surface of things it doesn’t look too bad, with the price of a house growing just 0.3% in January, and the annual change in prices falling from 4.5% growth in December, to 4.4% at the end of January.
But also in the report are comments from Nationwide’s chief economist Robert Gardner, which should be a big worry for people looking to buy a property.
Gardner points to the fact that UK employment is still on the up, and that real wages are also growing as reasons to suggest that demand for property will keep soaring in the coming months. Here’s what he said (emphasis ours):
With this trend [wage and employment growth] expected to continue and with interest rates also likely to stay on hold for longer than previously anticipated, the demand for homes is likely to strengthen in the months ahead.
The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.
So there we are, demand is going to increase, and the supply of new homes being built isn’t going to keep pace, pushing prices up and adding another bad sign to the horrible outlook for people wanting to buy property.
Homes in Britain, particularly in London and the South East, are already incredibly unaffordable for many. Late last year, Business Insider’s Lianna Brinded reported that buying a London property now requires a salary of £140,000, more than 4.5x average earnings, and in November, the Royal Institute of Chartered Surveyors said that “property is set to become even more unaffordable going forward.”