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The UK’s housing market

Construction is a key sector for Close Brothers Asset Finance with many of our customers involved in the housing market, which is currently experiencing a strong resurgence in many parts of the UK.

In this report we take a closer look at some of the less well-known elements of the housing market, from the number of homes in the UK to average house prices in the home nations.

Number of dwellings in England 2001-2020

The total number in England has been increasing steadily over the past two decades, reaching a total of 24.7 million as of March 2020, up from 21.2 million in 2001, an increase of around 3.5 million.

The number of dwellings is calculated from the estimated dwelling stock in each local authority.

Housing in London

In 2019, London had a population of 9.06 million residents and a housing stock of 3.59 million dwellings; by 2041, it’s estimated the population of London will grow to 10.35 million.

The average price for property in London stood at £696,453 in June 2021, a rise of 2.13% in the last three months (since March 2021) and rise of 8.37% over the previous 12 months. In terms of property types, flats in London sold for an average of £557,779 and terraced houses for £754,990. while semi-detached properties fetched £712,364.

London’s average house price is more expensive than nearby South East (£455,551), East of England (£378,414) and East Midlands (£242,334). The priciest area within London was Central London (£1,643,249) and the least expensive was East London (£506,412).

Age of houses in England

The distribution of housing stock in England can be broken down by dwelling age and tenure type, with more than 3.12 million owner-occupied houses built before 1919 and 1.5 million owner-occupied houses built after 2003.

The number of owner-occupied dwellings being constructed has decreased through the years; the majority of owner-occupied dwellings in England were constructed in 1980 or before. In 2019, there were around 15 million owner-occupied households in England.

England: share of owner-occupied households 2000 to 2020

The proportion of households occupied by the owners of the property in England from 2000 to 2020 decreased from 70.6% to 64.6%.

The largest share of owner occupied households in England was in 2003, when almost 71% of all households were recorded as owner-occupied.

England: proportion of private rented households 2000-2020

Around 4.44 million households were privately rented in England in 2020.

The proportion of households occupied by private renters in England from 2000 to 2020 generally increased, from 10% of households in 2000 to 20.3% in 2017.

Since then; however, the figure has fallen away to 18.7% in 2020.

England: share of socially rented households 2000-2020

In 2020, around 4 million homes were occupied by households socially renting, which is a steady decrease since 2000 - the proportion of households occupied by social renters in England fell from 19.5% of households to 16.7%.

Total housing completions in England Q3 2014-Q4 2019

Overall, the number of housing construction completions increased but there were notable fluctuations.

Completions reached nearly 45k in the fourth quarter of 2019; the smallest number of housing completions was in in the fourth quarter of 2014, when 29.8k construction completions were recorded.

Figures show that while the number of dwellings completed in England declined around the time of the global financial crisis, numbers are increasing – for example, in 2018/19, over 169,000 dwellings were completed in England.

New home construction by private companies

New home construction in England reached its lowest level for some time during the second quarter of 2020 but by the third quarter of the same year house building initiated by the private sector had improved, amounting to nearly 32k.

The peak in new house builds was reached in Q2 1988, with 54,280 new build starts.

New home construction by housing associations

Public housing starts in England more than doubled after the initial shock effects of COVID-19 on construction in the UK. By the third quarter of 2020, housing starts initiated by housing associations had gone up by nearly 4,000.

Average house prices across the UK

In March 2021, the average house price in England was over £100k more than any other home nation. This huge increase in average house prices is in no small part due to London, where the average asking price was more than double that of the UK’s average.

By 2022, the number of housing transactions in the UK is set to reach 1.3 million and with the expected increase in transactions, it’s expected the average house price is also set to grow.

UK monthly house price index

The house price index (HPI) tracks changes in the value of residential properties in England, Scotland, Wales, and Northern Ireland. With the HPI set at a base of 100 in January 2015, a value of over 100 marks an increase in the average dwelling price while a value of under 100 points indicates a drop.

Since 2015, house prices in the United Kingdom have risen, reaching a peak of 128.73 index points in October 2020 after some fluctuation at the beginning the year due to the coronavirus crisis and the measures introduced to contain the pandemic.

In the second half of the year, house prices saw their highest increase on record.

Detached / semi-detached / bungalows / terraced house prices

The increase in value of all four types of property tracked broadly along the same lines.

The average price for a:

Monthly completed house sales for England and Wales

In the second quarter of 2020, the completed house sales volume plunged but recovered towards the end of the year. The pandemic delayed many house sales while economic uncertainty and rising unemployment rates also affected potential buyers' intentions.

Between the second quarter of 2019 and the second quarter of 2020, the gross mortgage lending fell from over £66bn to £44bn.

Completed house sales – 2020

England: homeowner distribution 2020, by home financing and age

The older the age group, the larger the share of owner occupier homeowners who purchased their home outright. A share of 0.3% of own outright homeowners were between the ages of 16 and 24, while a share of 62.5% of own outright homeowners were aged 65 and over.

The largest share of homeowners who purchased their house with a mortgage was in the age range of 45 to 54 years old, with a share of 32%.

Average monthly cost of rent in the United Kingdom (UK) 2020, by region

The average rent for a house in the UK increased across most regions in 2020. Although Greater London was one of the areas that saw a decline in rents, it was still the most expensive area for renters.

In recent years, the UK`s residential property market has slowly become more favourable for renters, although Londoners spent the biggest proportion of their income on rent at more than one third of a household`s income.

High rents in the capital have sparked a move away to other regions, including the South East (Brighton and Southampton), the West Midlands (Birmingham) and the North West (Liverpool, Manchester, Blackpool and Preston).

Cost in £: