House prices in March 2022 were 11% higher than the same month a year earlier, the latest Halifax House Price Index has revealed.
On a monthly basis house prices were up 1.4%, which represents the biggest increase for six months.
Meanwhile, the average property price reached another new record high of £282,753 with prices having risen by £43,557 since the first lockdown.
The South West of England has overtaken Wales as the UK’s strongest performer in terms of annual price house inflation, now up to 14.6%, its highest rate of annual increase since September 2004. The average house price is now a record £298,162.
March also represents the first time since January 2021 that Wales has not recorded the UK’s highest annual growth. But it still posted a healthy 14.1% increase with the average house price now standing at £211,942 which is yet another all-time high for the country.
Property prices in Northern Ireland also continue to be on the rise, with annual growth now at 13%, and an average price of £177,265.
Though house prices also edged up once more in Scotland – reaching a new record of £194,621 – the rate of annual growth continues to slow somewhat, falling to 8.2% from 9.3% last month.
Elsewhere, the South East also recorded a big increase, with house price growth at 11.6% and an average price of £385,790. Prices in the region have now risen by £40,177 over the last year, the first time any English region outside of London has ever posted a £40,000-plus rise over just 12 months.
However, the Hali warned that house price growth would likely slow as the cost of living crisis continues to bite.
Russell Galley, managing director, Halifax, said: “Average UK house prices rose again in March for the ninth month in a row.
“The increase of 1.4%, or £3,860 in cash terms, was the biggest jump since last September. With 2021’s strong momentum continuing into the beginning of this year, the annual rate of house price inflation (+11.0%) continues to track around its highest level since mid-2007.
“The new record price of £282,753 is up some £28,113 on a year ago, not far off average UK earnings over the same period (£28,860).
“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 onto the market, the fundamental issue remains that too many buyers are chasing too few properties.
“The effect on house average house price prices makes it increasingly difficult for first-time buyers looking to make their first step onto 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 policymakers 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.”
Reaction
Sundeep Patel, director of sales at specialist lender, Together:
“Despite continued global economic uncertainty, average house prices, continued to rise – reaching an average of £282,753 by March.
“After the wave of April price hikes, the cost-of-living crisis continues to hit people hard in the wallet, as households try to manage surging costs.
“With new tax rates kicking in and interest rates increasing, potential homeowners looking borrow are likely to put the breaks on any property ventures as they reassess their finances before making their next move.
“It’s likely that house price growth will slow down as prices peak, while demand falls, and priorities shift for the rest of this year.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Halifax reports yet another uplift in property prices as demand continues to outstrip supply. Lenders are still keen to lend and have plenty of cash available to do so, enabling borrowers who may be sitting on considerable savings accrued during lockdown to stretch themselves to afford a bigger property.
“There has been wide speculation that higher fixed costs such as the hike in national insurance contributions and increase in general cost of living will impact affordability calculations when it comes to getting a mortgage. If costs are going up, it stands to reason that this will impact borrowers as there is less money available to service the mortgage.
“But for now, borrowers are taking advantage of low mortgage rates with some lenders, such as Halifax and Scottish Widows, increasing loan-to-income multiples from 4.49% to 4.75% for higher earners.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman,:
“These numbers are very strong but mostly reflect activity of the past few months.
“Since then we’ve noticed, on the ground, how rising interest rates, inflation and energy costs in particular, exacerbated by the war in Ukraine, have taken their toll. There is still plenty of market resilience and demand for correctly-priced houses and flats but increasingly stretched affordability is inevitably putting a break on price growth and transaction numbers.”
Gareth Lewis, commercial director of property lender MT Finance:
“Yet again the gap between supply and demand is pushing up prices. With the cost of living also rising, this is creating more issues in property chains with buyers having to find more money to purchase a property. Those who are trying to move up the ladder are finding it harder still as the trading gap grows wider; while their home has gone up in value, so has the one they are trying to buy so it will cost considerably more.
“First-time buyers are being squeezed left, right and centre, needing more money for a bigger deposit while the cost of living is also going up exponentially. It becomes a vicious circle which should inevitably stem the flow of property transactions.
“Something needs to be done to stimulate the market so that more people are able to buy, with the lack of housing being built in the first place an issue in urgent need of addressing.”
Alex Lyle, director of Richmond estate agency Antony Roberts:
“The housing market has been stubbornly short on supply but more stock is becoming available, particularly in the mid- to upper-family house market. This time of year plays its part in that, as well as some sellers bringing forward plans in the hope of benefiting from what could turn out to be a real window of opportunity.
“London continues its upwards trend in prices, with the family house market doing particularly well, with large numbers of viewings, multiple offers and sealed bid scenarios common. Flats can easily get stuck if pricing is too ambitious or inflated.
“This strong level of demand is likely to remain over coming months but more stock is required across all price ranges for that demand to remain committed. The rising cost of living, increases in interest rates and conflict abroad may in time dent confidence and impact sales volumes.”
Nicky Stevenson, managing director at national estate agent group Fine & Country:
“The housing market may well have hit maximum overdrive with this latest spike in prices.
“While markets don’t always move in straight lines, we’ve seen so many records broken that these surges have begun to feel like the new normal.
“Buyers are being encouraged to pay more and more because levels of housing stock remain low and competition is so fierce.
“While agents across the country are beginning to see a rise in new listings, far more is needed to satisfy demand.
“It’s as if the housing market has decoupled itself from the rest of the economy and the cost of living crisis has yet to make any dent on the prices people are willing to pay.
“Whether buyers are forced to reassess their budgets later in the year will depend on how acute affordability pressures later become.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“The release of every new set of house prices is starting to feel like Groundhog Day, with constant announcements of yet another record high becoming increasingly monotonous.
“There was so much expectation that the cost of living crisis would start to impact on house prices, yet prices continue to defy predictions and show month-on-month increases.
“House prices are being driven not by consumer confidence, but by the lack of properties available and the speed at which they are sold, with high demand driving prices higher.
“Last month saw the largest increase in six months and another new record high, and first-time buyers are more likely to be priced out as each month passes.”
Emma Cox, Director of Real Estate at Shawbrook:
“The continued impetus of house prices and volume of sales indicates that despite a tough backdrop of rising borrowing costs and lower LTVs, buyers have remained undeterred in an unfavourable and imbalanced landscape.
“Be that as it may, a correction of sorts is not out of the question as the year progresses, as prices may begin to cool off and fall in line with current inflation and interest rates.
“The property market is crying out for an influx of affordable, quality housing supply which will alleviate demand and help to bring house prices down to a more realistic level, in line with wage growth. It’s also paramount that the green agenda is kept front of mind by landlords, developers, housebuilders, and the government.
“Building houses quickly is one thing, ensuring that they are energy efficient, affordable and provide a high standard of living for tenants is something else entirely.
“Supporting landlords and property investors who are building or renovating current housing stock in the PRS must be prioritised ahead of any proposed changes to current energy efficiency regulations.”
