UK house prices hit a record high in June, according to Halifax, despite predictions that the rising cost of living would dampen demand.
UK house prices rose for the 12th consecutive month in June showing the market has “defied any expectations of a slowdown”, according to the Halifax House Price Index.
Back in May, Advantage wrote that Halifax anticipated that the rate of house price growth may begin to slow as incomes were squeezed. However, instead, as reported by the BBC, the mortgage lender said the average house price reached £294,845 in June after rising by 1.8% – the steepest monthly increase since 2007.
Lack of available homes boosts prices
Halifax said a lack of available homes for sale was lifting prices as well as a shift towards people buying larger, detached homes. But it still expects price growth will slow.
Mortgage Strategy shared Halifax’s regional breakdown of their data, which shows that Northern Ireland, where we recently announced that we’d opened a new office, had seen the biggest annual increase, at 15.2%, putting the average property price at £187,833, while house prices in Wales rose 14.3% – giving an average house price of £219,281.
In Scotland, house prices rose 9.9%, which means the average house price in the country, at £201,549, pushed past £200,000 for the first time in history.
And within England, the South West saw the highest house price rises in June, at a growth rate of 14.2%. Here, the average house price now sits at £308,128.
Halifax managing director Russell Galley says the UK housing market has “defied any expectations of a slowdown.”
“The supply-demand imbalance continues to be the reason house prices are rising so sharply,” adding: “Property prices so far appear to have been largely insulated from the cost of living squeeze.”
Mortgage lending has increased
Russell Galley added:
“This is partly because, right now, the rise in the cost of living is being felt most by people on lower incomes, who are typically less active in buying and selling houses. In contrast, higher earners are likely to be able to use extra funds saved during the pandemic, with latest industry data showing that mortgage lending has increased by the highest amount since last September.”
“In time though, increased pressure on household budgets from inflation and higher interest rates should weigh more heavily on the housing market, given the impact this has on affordability.”
“So while it may come later than previously anticipated, a slowing of house price growth should still be expected in the months ahead.”
The Evening Standard quoted Jason Tebb, CEO of OnTheMarket.com, who said:
“Despite considerable headwinds, buyer and seller sentiment remains stable in the market. The supply-demand imbalance is behind the continued rise in prices, although this is slowly improving as more stock becomes available.
“Signs of an inevitable, yet subtle, rebalancing of the market, are already evident. The ‘new normal’, an elevated version of the pre-pandemic market, continues, with serious property seekers still determined to move.”