JRF responds to rise in UK house prices

New data released today shows UK house prices have increased by 13.2% in the year to June 2021, the highest level of annual growth since before the global financial crisis.

The North West of England saw a large annual increase, with house prices rising by 18.6%, while the North East, Yorkshire & the Humber and the West Midlands all saw growth of at least 15%.

Wales had the highest increase in house prices out of the four nations, seeing a 16.7% increase in the same period.

In all areas except London rents continue to rise, with on average a 3.5% rise since September 2019 excluding London, and an increase of more than 5% in Northern Ireland, East Midlands and the Southwest.

The Joseph Rowntree Foundation (JRF) said this is concerning as the government has chosen to freeze housing benefit at the cost of renting in September 2019.

Rachelle Earwaker, an economist at JRF, said: ‘This huge annual increase in house prices will leave many prospective first-time buyers in despair as deposit requirements soar and the dream of buying their own home slips further away. Areas like the North West and North East which have previously been more affordable options are now experiencing extraordinary annual house price rises. While this benefits existing homeowners, it flies in the face of the Government’s aim to “turn Generation Rent into Generation Buy.”

‘Meanwhile, renters searching for a new tenancy, particularly those on lower incomes who rely on housing benefit to support their income, will struggle as rents have risen as much as 5% above the Government’s benchmark for housing benefit which is almost two years out of date. If the Government presses ahead with its plan to cut Universal Credit in a few weeks’ time, many families who are already struggling will be pushed to the brink.

‘The solution for families who cannot afford rising rents is to make renting more affordable. Investment in homes for social rent that are genuinely affordable to people on low incomes must be a key plank in the Government’s ‘build back better’ strategy.’

In related news, new analysis shows London needs to build 90-100,000 new homes each year to tackle the housing crisis – double the number currently being built according to recent government data.

Photo by Jonathan Ybem