House prices hit new record but growth expected to slow

The average UK house price rose 10.8 percent on an annual basis to £3,078 in April, marking the tenth consecutive monthly rise, the longest run of monthly rises since 2016, according to Lloyds Banking Group’s Halifax.

Albeit there has been a slight fall in the house prices in the UK to 10.8 percent from 11.1 percent, the prices hit a record £286,079. “This was the 10th consecutive month that property values have increased, the longest run of continuous gains since the end of 2016,” said Halifax’s managing director Russell Galley.

“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.”

The report indicates that the property market has continued to defy expectations, with the rate of house price growth accelerating since the end of the stamp duty holiday last year. However, there remains evidence that the 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 percent, compared to just 7.1 percent for average house price. At the current rate of growth, the price of a typical home could hit £300,000 by the end of the year, but Halifax said that remains unlikely given the economic conditions predicted.

Likewise the report reflects that the house prices have increased by £47,568 on average over the past two years. Galley pointed out that “The imbalance between supply and demand persists, with an insufficient number of new properties coming on to the market to meet the needs of prospective buyers and strong competition to secure properties driving up prices.”

Northern Ireland now the UK area with strongest house price inflation.

It may be noted that it took the previous five and a half years to make an equivalent leap, with values increasing by £47,689 on average between October 2014 and April 2020. “There remains evidence that this demand is centred on larger family homes rather than smaller properties such as flats,” Galley explained. “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.”

House prices have continued to climb despite the cost-of-living crisis putting a financial squeeze on households. “The headwinds facing the wider economy cannot be ignored,” Galley accentuated. “The house price-to-income ratio is already at its highest ever level (7.2 times full-time average earnings typically) 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.”

UK House Prices Historical data - All Houses, All Buyers (Seasonally Adjusted) Source: Halifax Index

Going by the report, it is clear that across the country, Northern Ireland is the strongest performer for annual house price growth, at 14.9 percent, although the average house price there remains some way short of its record of £230,931, set 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 percent. 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 percent.

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 percent and the average house price now breaking through the £300,000 barrier for the first time (£301,632).

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. SSIL does not guarantee the accuracy, legality, completeness, reliability of the information and or for that of subsequent links and shall not be held responsible for any action taken based on the published information.