Could rising energy caps increase house prices?

The latest data has revealed what the average cost of buying and renting a home would look like if house prices increased at the same rate as our spiralling energy bills.

We analysed the growth rate of the current energy cap since 2019. Additionally, we examined the average rate of house price growth (2019) and the current state of the property market.

While the energy cap fell in 2019, there have been three consecutive rises since - the most notable being April 2022, where the energy cap rose by 54.3%.

The rise of UK house prices

Previously in 2019, the average UK house price sat at £228,314. As a result of the pandemic property market boom, it today sits at £286,397, with a 25% increase.

However, if house prices mirrored the change in the energy cap, they would have seen a decline up until April 2021. As of April 2022, the average UK house price sat at £395,785.

When are energy costs likely to be at their highest?

Where the rising cost of energy is concerned, the worst is yet to come. In October of this year, the energy cap is set to climb to £3,549, a 80.1% increase. If house prices were to surge at the same rate, the inflated average cost of £395,785 would sky rocket to £712,654.

To keep up with shooting energy costs in April, the average tenant would have to be paying £1,616. This is almost £600 above the average actual rent of £1,091.

Meanwhile, if rents were to climb by the same margin as the energy cap increase in October, the average monthly cost would soar to £2,909.

‘Households overstretched due to energy cap increase’ - GetAgent CEO Colby Short

“The housing market has boomed since 2019 and house prices have climbed at some unprecedented rates, particularly during the pandemic. At the same time, the ongoing shortage of rental stock has forced the cost of renting ever higher, despite the pandemic-imposed wobble seen during lockdown.

So it really puts the current cost of living crisis into perspective when you consider the fact that, had house prices and rents kept pace with the increasing energy cap, they would be astronomically higher than they are today.

Of course, the cost of renting and homeownership are far more substantial than our annual energy bills, but it really does highlight the dire situation many households are facing and just how overstretched they really are as a result of the energy cap increase.”

Data and Methodlogy

Average house price if house prices had increased at the same rate as energy prices

Actual average house price and change

Average house price if house prices had increased at the same rate as energy prices

Actual average rental and change