Average house prices in the UK have hit another record high, despite an interest rate rise and Britons facing a mounting cost of living crisis.
Monthly house prices grew 1.1% in April pushing the average UK house price up to a record high of £286,079.
It means house prices have grown a staggering £47,568 since the start of the pandemic, according to the Halifax House Price index.
Regionally, Northern Ireland has overtaken the South West of England as the UK’s strongest performer in terms of annual price house inflation, now at 14.9%, its highest rate of annual growth since December 2007. The average house price is now £182,565 though this is still some way short of the country’s record high of £230,931, set prior to the financial crisis in the summer of 2007.
Wales, so often the area with the UK’s highest rate of growth in recent months, continues to record strong annual house price inflation of 14.2%. The average house price is £214,396 which is yet another all-time high for the country.
House prices also edged up once more in Scotland – reaching a new record of £196,471 – with the rate of annual growth now at 8.3%.
Elsewhere, six out of nine English regions recorded double-digit annual house price inflation during April. The South West of England continues to record the biggest increase, with year-on-year house price growth at 14.8% and the average house price now breaking through the £300,000 barrier for the first time (£301,632).
The rate of annual house price inflation in London continues to lag the rest of the UK, with prices now up by 6.2% year-on-year. However, average property values in the capital remain much higher than the rest of the country, with the latest average house price figure of £537,896 a new record for the city.
Russell Galley, managing director at Halifax, said: “The average UK house price rose again in April, up by 1.1%, or £3,078, in the month. This was the 10th consecutive month that property values have increased, the longest run of continuous gains since the end of 2016.
“Housing transactions and mortgage approvals remain above pre-pandemic levels and the continued growth in new buyer enquiries suggests activity will remain heightened in the short-term. The imbalance between supply and demand persists, with an insufficient number of new properties coming onto the market to meet the needs of prospective buyers and strong competition to secure properties driving up prices.
“There remains evidence that this demand is centred on larger, family homes, rather than smaller properties such as flats. Over the past year, prices for detached and semi-detached properties have risen by over 12%, compared to just 7.1% for
“For now, at least, despite the current economic uncertainty, the strong increases we’ve seen in house prices show little sign of abating. Demand in the housing market remains firm and mortgage servicing costs are relatively stable with fixed-rate deals making up around 80% of mortgages on homes across the industry, protecting many households from the effects of rate rises so far.
“However, the headwinds facing the wider economy cannot be ignored. The house price to income ratio is already at its highest ever level, and with interest rates on the rise and inflation further squeezing household budgets, it remains likely that the rate of house price growth will slow by the end of this year.”
Industry reaction:
Guy Gittins, CEO of Chestertons, commented: “Despite the incentive of last year’s Stamp Duty Holiday no longer available, 2022 continues to set new records. This April, the number of agreed sales jumped by a staggering 28% since the beginning of the year and 12% compared to April last year. London buyers registering with our branches this April were up 31% whilst viewings were equally at a record high. This demand has created a strong sellers’ market which has led to 38% fewer vendors willing to reduce their asking prices compared to April 2021.”
“The sheer volume of agreed sales in April has created a challenging workload for solicitors and banks which has impacted the time it takes to finalise a sale. Although we are nowhere near the delays the market has witnessed during the pandemic, buyers still need to be prepared for their deal to take slightly longer than anticipated.”
Tom Bill, head of UK residential research at Knight Frank, said: “We appear to have reached the summit of the recent period of UK house price growth. We don’t expect prices to fall but we are presumably in the final month or two of double-digit annual growth. The psychological impact of a rising base rate above 1%, higher mortgage rates, a cost-of-living squeeze and the gradual rebuilding of supply will all contribute to the slowdown as house prices come back down to earth later this year.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The pace of increase in interest rates and inflation is becoming an increasingly important theme, not just for the economy but for the property market.
“These figures are always an important barometer of market sentiment and show that the concerns of many buyers and sellers about economic uncertainty are still outweighed by their determination to find suitable property.
“Family houses remain the most popular choice for buyers but the continuing shortage of them means that no price correction is anticipated for the time being at least, just a slowing of house price growth.”
Anthony Codling, chief executive of proptech firm Twindig, said: “The Halifax House Price Index has now increased for 10 months in a row, its longest run of consecutive gains since 2016 as housing transactions and mortgage approvals continue to punch above their pre-pandemic levels.
“This suggests to us that either homebuyers are not phased by rising living costs or mortgage rates, they are seeking to move before they start to bite, or that perhaps for those higher up the income and wealth scales, the race for space continues for space continues for those less impacted by the economic and financial headwinds caused by rising prices and increasing mortgage rates.”
Nicky Stevenson, MD of Fine & Country, commented: “The doomsayers continue to be surprised by the data emerging from the U.K. housing market. Amid all the volatility elsewhere, this remains the one area of the economy which isn’t struggling.
“An acute shortage of housing stock has meant that prices have remained at elevated levels.
“Though pessimism will continue to grow as inflation spikes and a possible recession looms, for the time being at least house price growth seems largely insulated from these downward pressures.”
Lucy Pendleton, at James Pendleton, said: “This is a housing market with its fingers in its ears, ignoring the gales blowing around it and blithely carrying on.
“With all the economic speedbumps, the threat of inflation topping 10% and a spike in unemployment, it’s amazing how little things have been affected. Yet a tenth successive monthly rise has been notched up and annual growth is still in double digits.
“Appropriately for a market separated from reality, it is detached properties that are seeing the biggest growth, suggesting upsizers are still having to fight hardest over dwindling stock.
“The ongoing lack of supply and the savings left in some people’s pandemic piggy banks seem enough to fuel new buyer enquiries and keep the show on the road for now. Yet the latest interest rate rise to 1% is only going to make getting a mortgage tougher in the months to come.
“The cost of the average home could even reach £300,000 before the year is out, although the brakes may have been applied by then.
“In London slow and steady remain the watchwords. The capital’s 6.2% annual price rise may take longer to unwind if the market does turn south when the boom ends.”
Sundeep Patel, director of sales, at Together said: “Even with the cost-of-living crisis strangling consumer’s finances, housing continues to be in demand with property deals completing at record rates. House prices rose by 1.1% last month, with the average house price now at £286,079.
“However, with inflated prices for goods such as food and fuel, and typical mortgage rates set to double, first time buyers attempting to scale the property ladder still face tough affordability challenges.
“There remains too many buyers chasing too few properties and the frenzied spring moving season will be fuelled by an excess of demand and competitive pricing. But as budgets continue to tighten and people’s financial priorities shift, the property market boom may start to taper off as households reorder their finances and ability to spend.”
Iain McKenzie, CEO of The Guild of Property Professionals, said: “The property market is on a mission to break every record in the book, and ten consecutive months of rising prices is incredible.
“It won’t make sense for many prospective buyers that at a time when the cost of living is increasing in other areas, house prices are still going up sharply too.
“Prices are still driven by demand, and that is here to stay. Buyers are predominately looking for larger, family-friendly housing, so apartments and smaller properties are likely to be more affordable.
“Thankfully, most home-owners are protected from yesterday’s interest rate rise by the fact that the vast majority are on fixed-rate deals, but it causes yet more hardship for aspiring first-time buyers.
“The ratio of house prices to income is at its highest level for years, and all signs point to the growth in property prices cooling by the end of the year.”
Jason Tebb, CEO of OnTheMarket, commented: “With further house price rises in April, the tenth consecutive month in which values have increased, all the evidence suggests that the housing market is far from slowing down.
“The level of new instructions coming to the market continues to rise slowly, in part due to normal seasonal trends, but there’s still not enough to keep up with demand and this strong competition is driving up prices.
“A remarkable level of confidence remains in the market, despite considerable headwinds. Buyers who are serious about moving should be decisive or risk missing out on their chosen property, particularly if they want to take advantage of low mortgage rates while they can.”