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Opinion
Marcus Ashworth

Red-Hot Real Estate Prices Are Due for a Summer Breather

The pace of house price growth in the U.K. looks unsustainable, but policymakers may have to act first to rein in it. 

It comes at a price.

It comes at a price.

Source: Bloomberg

U.K. house price rises have reached a 17-year high, according to the June Nationwide survey citing 13.4% annual growth. Statistically, this pace looks unsustainable, as prices for the rest of the year will be compared with the swiftly rising prices of the second half of 2020. Those base comparison effects will probably show the annual rate of change topping out.

But prices will be steadily rising for quite some time yet. The U.K. is only in fifth place in the global trend of much of the developed world experiencing rapid house price growth. (New Zealand, Canada, Sweden and Norway come out ahead.) And these gains are appearing despite a retreat of international buyers due to Covid travel restrictions. Eventually, they’ll be rejoining the party. What’s more, price spikes are spreading to rentals. Pretty soon it won’t just be Houston (well, Austin, Texas, this time) that has a problem.