Will an interest-rate rise spark the end of Britain's housing bubble?
The UK property market has boomed since Covid-19, underpinned by cheap money. But that could soon end.
UK property has shrugged off the end of the stamp-duty holiday. Online estate agent Rightmove reports that “every region of Britain saw house asking-price records broken in October”, says Helen Crane on This Is Money. That is the first time this has happened since March 2007. Wales and the northwest of England have seen the strongest rises, as buyers race to complete before expected interest-rate hikes from the Bank of England.
The average UK asking price is up by 6.5% year-on-year at £344,445, but “most homes still sell below the asking price”. Property website Zoopla calculates that the boom has taken the total value of British homes up by £550bn in a year, says Hilary Osborne in The Guardian. Zoopla values the housing stock at £9.2trn, four times GDP. The market has boomed since Covid-19, says Ross Clark in The Spectator.
But could an interest-rate rise finally do for UK property? Cheap money has underpinned the long boom: prices in many places have quadrupled over the last 30 years, but that is only because mortgage rates have plunged by 75% over the same period. The trouble is that the government is so scared of the chaos that a housing bust would unleash that it is unlikely to let it happen: witness the tax goodies offered to the sector during the pandemic. Governments “of both colours have repeatedly come up with wheezes to keep the housing market afloat”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
Emerging markets boast top growth stocks at bargain prices
Opinion Lim Wen Loong, investment director at Ashoka WhiteOak Capital, selects three growth stocks where he’d put his money
-
Beware the bubble in bitcoin treasury companies
Bitcoin treasury companies are no longer coining it. Short this one, says Matthew Partridge
-
Emerging markets boast top-quality growth stocks at bargain prices
Opinion Lim Wen Loong, investment director at Ashoka WhiteOak Capital, selects three growth stocks where he’d put his money
-
Beware the bubble in bitcoin treasury companies
Bitcoin treasury companies are no longer coining it. Short this one, says Matthew Partridge
-
Klarna leads a financial revolution – should investors buy?
Klarna has ambitions to rewire the global payments system and has huge growth potential
-
New faces don’t solve old problems – why strategy also matters when it comes to investment trusts
Opinion Changing managers often fails to boost a trust’s performance, says Max King
-
How to profit from silver’s record rise
Silver often lets investors down, but there may now be room for further gains, says Dominic Frisby
-
Are venture-capital trusts worth investing in?
Venture-capital trusts are a tax-efficient way to invest in early-stage companies. But are they worth the risk?
-
'Investors should back the AI maximalists'
Polar Capital is bullish on AI and believe that the sector is far from being a bubble
-
Waiting for a UK REITs rally – is real estate poised for a rebound?
Investors are still cautious about UK REITs. Private equity is snapping them up. One view must be wrong, says Cris Sholto Heaton