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UK house prices soar 189% over 20 years

The average price of residential property in the UK has increased by 189% since 1999, according to fresh analysis from independent mortgage broker Private Finance. 

The latest UK House Price Index shows that the average UK property price was £80,443 in July 1999, compared to £232,710 in July 2019, which is a 189% increase in nominal terms. 

The study shows that the top five most expensive areas in the UK have remained broadly unchanged, with Kensington and Chelsea retaining the top spot in both 1999 and 2019 – though average house prices for each area have undergone significant changes. 

In Kensington and Chelsea, for example, the average house price has risen from £309,698 to £1,295,861 – a percentage increase of 318%.

It would appear that growth in property prices has been supported largely by a drop in mortgage rates, although the widening supply-demand imbalance in the market has also played a significant part in pushing up property prices. 

Average mortgage rates have become far more affordable over the past 20 years. 

For example, the average two-year fixed rate at 75% loan-to-value (LTV) in 1999 was 6.19% – today, this rate is now as low as 1.64%, according to the latest Bank of England Quoted Rates data. 

Similarly, a five-year fixed deal at 75% LTV is now just 1.92%, compared to 6.64% in 1999.

Growth in property prices has inevitably led to an increase in the number of transactions for residential properties valued at £1m and above. 

The data provided by Private Finance reveals that there were 1,254 transactions for residential properties valued at £1m and above in 1999. By 2018 this had increased more than twelve-fold to 15,445. 

The number of transactions for residential properties valued at £5m or more increased at an even greater pace over the same period, up from just 22 to 323. 

This comes despite the annual volume of all residential housing transactions across England and Wales falling from 1,194,025 in 1999 to less than 900,000 in 2018 (868,886).

Simon Checkley, managing director, Private Finance, said: “In the 20 years since Private Finance was founded, the housing market has undergone a radical transformation, with average house prices in particular almost unrecognisable. Transactions of houses in higher price brackets has soared in accordance with rising prices, creating a much bigger and more complex prime market.

“Though activity in the housing market this year has been subdued, the prime market remains supported by years of consistent growth. Less activity is to be expected given the ongoing political and economic uncertainty affecting the country, which has impacted the number of prime transactions in the capital in particular.  

“However, once Brexit has reached its conclusion, we anticipate a rush of pent-up demand as the spectre of uncertainty is at least somewhat removed. Recent price falls will make UK prime property an attractive prospect for overseas buyers, and domestic buyers will be looking to get their property plans back on track. Independent mortgage advice is vital for prime buyers who often have complex income structures and, with such high values of stake, could skim thousands of pounds off their monthly repayments by selecting a competitive deal.”

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