Inflation continues to outpace house price growth

Despite the market largely recovering from the effects of last year's mini-budget, average UK house prices would need to increase by over £13,400 in order to keep pace with inflation.

Related topics:  Finance,  Property,  house prices,  inflation
Property | Reporter
28th November 2023
house stats
"The property market has proved resilient so far this year and while house price growth has slowed, we simply haven’t seen the drastic market correction that was so widely predicted at the start of the year"
- Verona Frankish - Yopa

Newly released research by national estate agency, Yopa, analysed current inflation levels and house price growth across 62 major UK towns and cities to reveal how the current value of bricks and mortar is actually performing when pitted against the wider health of the economy.

Inflation has continued to fall in recent months and the latest figures show that it is now at its lowest point in two years at 4.6%, albeit still some way off the Bank of England’s 2% target. But while this may well mean we’ve now seen the peak of rising interest rates, the property market has continued to struggle as buyers come to terms with the higher cost of borrowing.

In fact, the latest figures from the Land Registry show that house prices have fallen by -0.1% year on year. This means house price performance is currently trailing inflation to the tune of -4.7% and the average UK house price would have to climb by £13,404 in order to keep up with inflation.

At a local level, every city analysed by Yopa is currently underperforming when it comes to the balance between estimated local inflation levels and house price growth.

Oxford is the worst of the bunch, where house prices would need to see the largest monetary increase in order to keep up with inflation. Inflation across the city is currently estimated to sit at 4.5%. At the same time, house prices have climbed by a relatively healthy 2.3% in the last year, but this still puts the market at a deficit of -2.2%.

With the average house price currently sitting at a lofty £498,261, Oxford house prices would have to increase by as much as £22,621 in order to outpace inflation.

In Brighton, an even higher rate of inflation (5.1%) and an annual decline in property values (-3.5%) means the market would need to see a £21,614 boost to the current average house price in order to overcome inflation.

London also ranks within the top three where house prices would have to climb by £20,798 in order to outperform inflation.

Other areas to rank within the top include Cambridge (£19,915), Worthing (£18,198), Bristol (£16,844), Bournemouth (£16,550), Edinburgh (£16,283), Southend (£16,278), Exeter (£16,077) and Basildon (£15,942).

At the other end of the table, Burnley is not only home to the highest rate of inflation at the city level (6.2%) but the town has also seen the largest annual decline in house prices at -10.9%. However, with the average house price sitting at just £104,626, the property market would need to see a boost of just £6,455 in order to outperform inflation, the lowest of all areas analysed by Yopa.

CEO of Yopa, Verona Frankish, commented: “The property market has proved resilient so far this year and while house price growth has slowed, we simply haven’t seen the drastic market correction that was so widely predicted at the start of the year.

"Inflation is also falling and this means we’ve likely seen the end of increasing interest rates. This should help build buyer confidence in the market and help to recultivate house prices in the long term.

"However, while the outlook is positive, there’s still some way to go when it comes to the balance between inflation and house price growth, as the property market is yet to outpace the former.”

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