How have house prices changed?
Our research reveals that the average house price across the UK was £88,466 entering the year 2000, compared with £329,988 today. At the time, house prices were growing fast (13%) due to a combination of lower mortgage rates and deregulation in the mortgage sector.
By September 2007 the average house price had catapulted to £190,032 — a 242.8% rise in 12 years.
However, the legacy of the credit crunch, including tighter mortgage regulation, heralded the end of long-term inflation-busting house price growth.
Annual house price growth peaked in January 2003 at 24.8%, before values bottomed out in February 2009, having fallen 21%.
Most areas have since recovered, thanks to rising population levels and lower levels of housebuilding.
But of course there have been peaks and troughs.
Huge spikes in activity have been aided by the introduction of Help to Buy in 2013, and the Covid-19 stamp duty holiday, while stricter mortgage rules introduced in response to the financial crisis and the rise in interest rates following the Liz Truss mini-Budget caused a dip in transactions and growth.
Where have house prices risen the most?
Rising prices have transformed swathes of the country, particularly London, due to high levels of migration, high demand for housing and poor housebuilding rates. Values have increased 357% over the period – presenting buyers in the capital with a more exaggerated set of circumstances.
Walthamstow, in northeast London, tops the chart for the most significant growth. Those looking to purchase in this London borough will be paying 652% more than the average house prices in 2000 (£84,700 vs £553,018 today).
But even outside London the rise of aspirational urban living has led to the likes of Bristol, Bath, York and Manchester outperforming the rest of the UK since 2000.
The plight of the first-time buyer
First-time buyers have found it increasingly difficult to get onto the housing ladder over the past 25 years. In 2000, the average purchase price was £68,700, but this amount has more than tripled to £255,400.
In order to contend with higher house prices those looking to take their first step onto the ladder are now borrowing 3.22 times their income, vs 2.24 back in 2000. In the face of tighter mortgage regulation, the average first-time buyer deposit has risen from 55% of household income in 2000 to 94% today. In London, this has risen from 69% to 142%.
This has not only led to an increase in the number of young adults living with parents (from 2.4 million 25 years ago to 3.6 million today). But it has also led to a significant expansion of the so-called Bank of Mum and Dad, with those who can rely on family support finding it much easier to get onto the housing ladder.
Further information
Contact Lucian Cook
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