Halifax reported that house prices increased by 1.1% in April, sending average prices to a new record of £286,079. This rise sees average house prices gain £47,568 over the last two years.
To put this in context, it took the previous five and half years to make an equivalent leap (+£47,689 between October 2014 and April 2020).
Indeed, average house prices have fallen in just four months since the start of the pandemic. The average monthly gain of 0.9% during the past year is more than double the typical monthly increase seen over the previous decade.
The rate of annual growth fell slightly to 10.8% (from 11.1%), though this partly reflects the strength of the market 12 months ago.
At the current rate of growth, it raises the prospect of a typical home hitting £300,000 by the end of this year. However, as outlined above, such a prospect remains unlikely given the forecast economic conditions.
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, 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
flats. The net cash increase for detached properties, at just under £50,000 over the past year, is nearly five times more than for flats.
“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.”
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.”
Guy Gittins, CEO of Chestertons, says: “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.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "Prices continue to rise as competition from buyers for a relatively limited amount of stock pushes values to new highs.
"With another interest rate rise this month, and the potential for more to come, brokers are being kept busy. Borrowers are increasingly concerned about rising mortgage rates and are keen to secure a fixed rate in particular before they rise further. Longer-term fixes are increasingly popular as borrowers hunt for security. With lenders pulling some deals with little or no notice though, decisions have to be made quickly."
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 remain 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.”
