In the U.K., home prices increased at their fastest rate in 18 years in March. The average asking price there is now £360,101, or $458,221, according to the latest home pricing index by British online real estate site Rightmove.

Home asking prices are 9.9% higher than they were 12 months ago. In the first three months of 2022, those prices have increased faster than during any other three-month period.

Average asking prices in the U.K. are now even higher than in the U.S., where the median listing price is $405,000, up 14% from last year.

Despite three interest rate hikes that the Bank of England approved beginning in February to counter inflation, U.K. home prices have continued to rise. 

A low supply of homes

There is one particular statistic that is playing a big role in making both the U.S. and U.K. housing markets stay hot. It’s the inventory of new homes for sale, and in both countries, inventory is still far too low to meet soaring demand.

In February 2022, there were around 36% fewer homes on the market in the U.K. than at the start of 2020. In the U.S., the number of available listings last month had fallen 62% from March 2020.

In the pandemic’s early days, demand for new U.S. homes soared as low mortgage rates and remote work options enticed more potential homebuyers to jump into the market. The influx of new homeowners—many of whom are now unwilling to sell—ended up severely cutting into the country’s housing inventory.

In March, U.S. home prices hit a record high, with a 19.2% gain over the past 12 months. Competition for housing in the first few months of 2022 has been at an all-time high, as the number of homes for sale fell well short of surging demand.

In the U.K., something similar happened in 2020 when the government put a pause on purchase taxes for homes costing less than £500,000 to boost the country’s housing markets after the pandemic’s first lockdown. Just as in the U.S., the tax breaks incentivized people to scoop up homes.

The tax break expired at the end of September, but despite initial evidence of prices cooling after the tax break ended, they quickly shot back up again in the first months of 2022, as low inventory had already left its mark on the U.K. housing market.

“The high demand from a large number of buyers chasing too few properties for sale has led to a spring price frenzy,” Tim Bannister, director of property data at Rightmove, said in the company’s index.