Sunday, 29 May 2022

Average house prices hit new high but growth is slowing

THE latest house price index published by Halifax shows that, although the rate of price growth is slowing down, the average house price has risen to a record high of £276,759.

This is £24,500 up on this time last year, and £37,500 higher than two years ago.

Russell Galley, managing director of Halifax, said: “House price growth slowed somewhat at the start of the year, rising by just 0.3 per cent in January, the smallest
monthly increase since June 2021.

“This followed four consecutive months of gains above one per cent, and with annual growth remaining at 9.7 per cent, the average UK house price was little changed, edging up slightly to a new record high of £276,759.

“Following the peak activity of 2021, transaction volumes are returning to more normal levels. Affordability remains at historically low levels as house price rises continue to outstrip earnings growth.

“Despite record levels of first-time buyers stepping onto the ladder last year, younger generations still face significant barriers to home ownership as deposit requirements remain challenging.

“This situation is expected to become more acute in the short-term as household budgets face even greater pressure from an increase in the cost of living, and rises in interest rates begin to feed through to mortgage rates.

“While the limited supply of new housing stock to the market will continue to provide some support to house prices, it remains likely that the rate of house price growth will slow considerably over the next year.”

Meanwhile, in its latest residential market survey, the Royal Institution of Chartered Surveyors (RICS) reported more prospective home buyers in January.

The increase in demand for property surveys was at its highest level since the peak of the stamp duty holiday in May 2021 — however this occurred before the most recent rise in interest rates.

Simon Rubinsohn, RICS chief economist, said: “The increase in new market appraisals is an encouraging signal that more supply may be funnelled onto the market over the coming months, but it remains to be seen whether any uplift in this area is sufficient to match the resilient trend in demand.

“That said, there is an inevitable question mark over the impact of rising interest rates, allied to the jump in the cost of living on homebuyer sentiment.”

Property

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