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, according to the Halifax House Price Index.
After 2021’s record level of housing transactions, Advantage predicted in December that what followed might be “somewhat more gradual, but sustained, house price growth for years to come”.
And after a very brisk start to the year in terms of property transactions, Halifax anticipates that the rate of house price growth may slow as incomes are squeezed.
Strong competition to secure properties is driving up prices
Russell Galley, Halifax’s Managing Director, said:
“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.”
Demand in the housing market remains firm
“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.”
Russell Galley concluded:
“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.”
Some estate agents report bidding wars among buyers
The Guardian reported that:
“Housing demand is currently outstripping supply, with estate agents in some parts of the country reporting bidding wars among buyers. Anthony Codling, the chief executive of the property consultancy Twindig, said if prices did start to turn down there would be “a step back of supply and a step back of demand” rather than a crash. Homeowners will sit tight if they think their property will fetch less than they want, which will support prices.”
The publisher added:
“Outside the buy-to-let sector, if the UK goes into recession it does so at a time when mortgage holders are protected like never before. The mortgage market review that followed the banking crash brought in strict rules on lending, and put an end to 100%-plus mortgages for borrowers who did not have to show any evidence of their income. Instead, borrowers have undergone strict affordability checks and had their finances “stress-tested” to make sure they can pay a rate far in excess of the ones widely being offered by banks and building societies.”
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