Monday, 04 July 2022

Record high house prices two years after first lockdown

LAST month marked two years since the UK first entered lockdown. At that time, faced with huge levels of economic uncertainty, few could have anticipated just how resilient
the housing market would prove to be.

Overall, the average house price has risen by 18.2 per cent over that period, or £43,577 in cash terms. This has taken the national average house price from £239,176 in March 2020 to £282,753 in March 2022.

The impact of the pandemic on buyer demand can be seen most clearly when looking at different property types, and there is now a premium put on properties with more indoor and outdoor space.

The average price of a detached property has leapt by 21.3 per cent over the last two years, compared with 10.6 per cent for a flat.

Russell Galley, Managing Director of Halifax, said: “Average UK house prices rose again in March for the ninth month in a row. The increase of 1.4 per cent, or £3,860 in cash terms, was the biggest jump since last September.

“The annual rate of house price inflation, 11 per cent, continues to track around its highest level since mid-2007. The new record price of £282,753 is up £28,113 on a year ago.

“The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on households’ finances.

“Although there is some recent evidence of more homes coming on to the market, the fundamental issue remains that too many buyers are chasing too few properties.

“The effect on house prices makes it increasingly difficult for first-time buyers looking to make their first step on to the ladder, but also challenges home-movers who face ever bigger leaps to move up the rungs to a larger property.

“However, in the long term we know the performance of the housing market remains inextricably linked to the health of the wider economy.

“There is no doubt that households face a significant squeeze on real earnings, and the difficulty for policy-makers in needing to support the economy yet contain inflation is now even more acute because of the impact of the war in Ukraine.

“Buyers are therefore dealing with the prospect of higher interest rates and a higher cost of living. With affordability metrics already extremely stretched, these factors should lead to a slowdown in house price inflation over the next year.”

Property

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