Nationwide has reported that annual house price growth year-on-year has now hit 14.3% - the highest since November 2004. Last month it was 12.6% - just another part of the new cost of living crisis as inflation punishes the UK.
Analysts are concerned given the housing market boom in 2004 was the very one that saw a surge in property acquisition as an investment and years of 'flipping' from other buyers looking to profit from tactical renovation work.
The report from Nationwide details a 21% price increase between now and the start of 2020, but Moneyweek are suggesting that with interest rates extremely low until recently, the incentive to buy more expensive property was still there for buyers.
In that same time period, gold as an investment has risen by 17.29% in Pound Sterling (since mid-March 2020). It's quite the comparison to put housing so close in performance to a safe haven asset designed with inflation and economic uncertainty in mind...
With unemployment low at present, there seems likely no end to this boom period for housing until interest rates rise far enough to put a dent in ambitions. Recession and job losses would also do the trick. The issue is, neither is likely to happen – at least in the short term. The Bank of England is taking things very slowly with interest rates so as not to disrupt growth. If that remains, jobs remain, and so too with them mortgage/rent payments.
For now, those looking to buy must be patient or suffer the pain of paying such high prices, but that pain is being felt across the economy and if it continues could lead to serious issues for the government. Rising poverty will lead to rising civil unrest, but lets see what the Bank of England and the Treasury can do to swing things back in the right direction.