House prices increased by 1.1% in April, the tenth consecutive monthly rise and the longest run since 2016, according to the Halifax House Price Index.
House prices are up £47,568 over the past two years with the average property price having now reached another new record high of £286,079.
Northern Ireland has overtaken the South West of England as the UK’s strongest performer in terms of annual price house inflation, now at 14.9%, its highest rate of annual growth since December 2007.
The average house price is now £182,565 though this is still some way short of the country’s record high of £230,931, set prior to the financial crisis in the summer of 2007.
Wales, so often the area with the UK’s highest rate of growth in recent months, continues to record strong annual house price inflation of 14.2%.
The average house price is £214,396 which is yet another all-time high for the country.
House prices also edged up once more in Scotland – reaching a new record of £196,471 – with the rate of annual growth now at 8.3%.
Elsewhere, six out of nine English regions recorded double-digit annual house price inflation during April.
The South West of England continues to record the biggest increase, with year-on-year house price growth at 14.8% and the average house price now breaking through the £300,000 barrier for the first time (£301,632).
The rate of annual house price inflation in London continues to lag the rest of the UK, with prices now up by 6.2% year-on-year.
However, average property values in the capital remain much higher than the rest of the country, with the latest average house price figure of £537,896 a new record for the city.
Russell Galley, managing director, Halifax, said: “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.
“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.
“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.
“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.”
Reaction
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“Prices continue to rise as competition from buyers for a relatively limited amount of stock pushes values to new highs.
“With another interest rate rise this month, and the potential for more to come, brokers are being kept busy. Borrowers are increasingly concerned about rising mortgage rates and are keen to secure a fixed rate in particular before they rise further. Longer-term fixes are increasingly popular as borrowers hunt for security. With lenders pulling some deals with little or no notice though, decisions have to be made quickly.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“The pace of increase in interest rates and inflation is becoming an increasingly important theme, not just for the economy but for the property market.
“These figures are always an important barometer of market sentiment and show that the concerns of many buyers and sellers about economic uncertainty are still outweighed by their determination to find suitable property.
“Family houses remain the most popular choice for buyers but the continuing shortage of them means that no price correction is anticipated for the time being at least, just a slowing of house price growth.”
Tomer Aboody, director of property lender MT Finance:
“The trend and desire for buyers needing more space has never been more obvious with detached properties increasing in value by five times more than flats. This is also a result of a low interest rate environment, with buyers pushing themselves in order to buy their dream home, which increasingly may not be achievable with higher inflation and interest rates on the rise.
“A continuous increase in prices over ten months is unheard of, but not surprising as transaction levels are low and buyers fighting for the same property.
‘A slowdown is imminent, however, with rates going up and the cost of living increasing so increasingly buyers will not be able to afford a move or carry out works.”
Sundeep Patel, director of sales, at Together:
“Even with the cost-of-living crisis strangling consumer’s finances, housing continues to be in demand with property deals completing at record rates. House prices rose by 1.1% last month, with the average house price now at £286,079.
“However, with inflated prices for goods such as food and fuel, and typical mortgage rates set to double, first time buyers attempting to scale the property ladder still face tough affordability challenges.
“There remains too many buyers chasing too few properties and the frenzied spring moving season will be fuelled by an excess of demand and competitive pricing. But as budgets continue to tighten and people’s financial priorities shift, the property market boom may start to taper off as households reorder their finances and ability to spend.”
Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco:
“The tenth consecutive monthly rise recorded by the Halifax may well be the last. Even though prices rose sharply again in April, the house price boom will soon be over. The Stamp Duty holiday, record low interest rates and the race for space triggered an unprecedented surge in demand and activity, pushing prices ever higher, but we’re now entering the business end of the pandemic.
“Sky-high inflation, rising interest rates and a potential recession ahead will hit demand while lenders are becoming ever more cautious, which will restrict what people can borrow. This will almost certainly see the rate of price growth slow during 2022 and into next year. Few can deny that there is now a massive economic storm blowing in. Only the drastic lack of supply can prevent prices from falling.”
Ross Boyd, founder of the always-on mortgage comparison platform, Dashly.com:
“April may well have been the property market’s last fandango. With inflation tipped to hit 10% and interest rates rising, this rate of price growth simply cannot continue. With bills soaring across the board, people are increasingly battening down the hatches and that will hit bricks and mortar. The lack of stock will prevent prices falling sharply but prices are likely to cool during the second half of the year. The popularity of larger, family homes, reflects the ongoing race for space, and this trend could continue for some time yet.”
Charles Yuille, managing director of Bath-based independent mortgage broker, Willow Brook Mortgages:
“The surreal growth in the property market during the past two years, highlighted once again in April, is about to be hit by very real economic forces. As the cost of living crisis accelerates and interest rates rise to curb the highest inflation we’ve seen in decades, the rate of price growth can only start to cool. The level of price growth we have seen during the pandemic simply cannot continue and will almost certainly drop off during 2022. However, the phenomenal lack of supply will ensure prices stabilise rather than collapse.”
Jamie Thompson of Manchester-based Jamie Thompson Mortgages:
“On this evidence, all is well in the property market, but with the economy deteriorating before our eyes there could be carnage ahead. Mortgage lenders are tightening up affordability requirements, which will reduce the supply of money available for people to buy houses. If people can’t borrow as much, property prices can only come down.”
Andrew Simmonds, director at Bristol-based Parker’s Estate Agents:
“It’s been a slow start overall to 2022, with transactions limited by the sheer lack of stock and people staying indoors during the winter months, but the past few weeks have seen an increase in new instructions and buyers seem to have become more active again. That is likely to explain the strong growth in April. As the weather improves, so does the property market by and large. There is still limited stock and that is hampering transaction levels. Despite the worrying global backdrop and inflation, coupled with a slowing economy domestically, I am not seeing as much nervousness as some would make you think. I believe the next quarter will show a strong transactional market as the spring and early summer are often a key time to buy and sell homes.”
Lewis Shaw, founder of Mansfield-based Shaw Financial Services:
“April may have been another barnstorming month, but the wheels could come off the property market spectacularly during the second half of the year. Will house prices fall? Probably not, mainly due to the lack of supply. Are mortgage lenders starting to show signs of tightening their belts and taking a more cautious approach? Yes. That will temper transaction levels in the months ahead. A lot will depend on the strength of the jobs market and how it holds up under the countless headwinds it faces. But there is a very real risk of recession ahead.”
Rob Peters, director of Altrincham-based simple Fast Mortgage:
“We are yet to see the real impact of inflation, the increased cost of living and tighter lender affordability criteria on the property market as there is always a lag. April may be the last month of the extraordinary growth over the past two years. Though all the signs suggest house prices could be under serious pressure, the property market is unlikely to simply topple over. The laws of supply and demand will continue to prevail. Strong purchasers with good deposits and higher earnings will become buyer favourites.”
Rob Gill, founder of London-based Altera Mortgage Finance:
“Having seen double-digit growth during a global pandemic, the UK property market has proved resilient enough to flourish during the biggest crisis the country has seen since WWII. Whilst the cost of living crisis will have a significant impact on many, it’s a brave person who’d bet against property prices somehow holding up. Logic and the property market don’t go hand in hand.”
Lucy Pendleton, property expert at independent estate agents James Pendleton:
“This is a housing market with its fingers in its ears, ignoring the gales blowing around it and blithely carrying on.
“With all the economic speedbumps, the threat of inflation topping 10% and a spike in unemployment, it’s amazing how little things have been affected. Yet a tenth successive monthly rise has been notched up and annual growth is still in double digits.
“Appropriately for a market separated from reality, it is detached properties that are seeing the biggest growth, suggesting upsizers are still having to fight hardest over dwindling stock.
“The ongoing lack of supply and the savings left in some people’s pandemic piggy banks seem enough to fuel new buyer enquiries and keep the show on the road for now. Yet the latest interest rate rise to 1% is only going to make getting a mortgage tougher in the months to come.
“The cost of the average home could even reach £300,000 before the year is out, although the brakes may have been applied by then.
“In London slow and steady remain the watchwords. The capital’s 6.2% annual price rise may take longer to unwind if the market does turn south when the boom ends.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“The property market is on a mission to break every record in the book, and ten consecutive months of rising prices is incredible.
“It won’t make sense for many prospective buyers that at a time when the cost of living is increasing in other areas, house prices are still going up sharply too.
“Prices are still driven by demand, and that is here to stay. Buyers are predominately looking for larger, family-friendly housing, so apartments and smaller properties are likely to be more affordable.
“Thankfully, most home-owners are protected from yesterday’s interest rate rise by the fact that the vast majority are on fixed-rate deals, but it causes yet more hardship for aspiring first-time buyers.
“The ratio of house prices to income is at its highest level for years, and all signs point to the growth in property prices cooling by the end of the year.”
Nicky Stevenson, managing director at national estate agent group Fine & Country:
“The doomsayers continue to be surprised by the data emerging from the U.K. housing market. Amid all the volatility elsewhere, this remains the one area of the economy which isn’t struggling.
“An acute shortage of housing stock has meant that prices have remained at elevated levels.
“Though pessimism will continue to grow as inflation spikes and a possible recession looms, for the time being at least house price growth seems largely insulated from these downward pressures.”
Emma Cox, MD of Real Estate at Shawbrook:
“House price growth has remained exceptionally strong because of high demand and a shortage of housing stock. A large proportion of people are still looking to move this year, with determined buyers acting quickly to secure their purchases.
“However, the squeeze on household budgets and higher borrowing costs are likely to lead to a cooling off in the quarters ahead. Consumer confidence is suffering from the prospect of even higher energy prices and the effects of the war in Ukraine. With more rate rises from the Bank of England on the horizon this will put pressure on mortgage affordability, forcing many homebuyers to review their budgets.
“Despite market pressures, house prices remain at the highest level on record, with annual growth in double-digits. Lenders are continuing to offer new products, flexible rates and attractive LTVs to support the needs of homebuyers and buy-to-let investors.
“It is also essential for landlords and developers to receive the right support from the government to contribute quality, affordable properties to the housing stock.”
