The average house saw in a £6,000 increase in value between June and July this year, according to the latest Land Registry figures.
Between the same months in 2021 house prices fell by £13,000 as the end of the Stamp Duty holiday had a knock on effect on prices.
That impact has also magnified the increase in house prices on a yearly basis which now stands at 15.5%. In June the year-on-year increase was 7.8%.
Following the increase the average house price for July was £292,000, up from £286,000 in June.
By country
Scotland saw an increase of 9.9% over the year to July, down from an increase of 11.4% in the year to June 2022.
The average house price in Scotland now stands at the record level of £193,000.
In Wales the average house price increased by 17.6% over the year to July, up from an increase of 9.1% in the year to June.
It was yest another record month for The Principality with the average house price at a high of £220,000.
Meanwhile, in England the average house price increased by 16.4% over the year to July, up from an increase of 7.3% in the year to June.
Again the average house price was at a record level (£312,000) in July.
The average house price in Northern Ireland increased by 9.6% over the year to Quarter 2 (Apr to Jun) 2022.
Northern Ireland remains the cheapest UK country in which to purchase a property, with the average house price at £169,000.
Around the regions
The South West was the region with the highest annual house price growth, with average prices increasing by 20.7% in the year to July.
This was up from a growth rate of 7.8% in June. The lowest annual house price growth was in London, where average prices increased by 9.2% over the year to July 2022, up from 6.3% in June 2022.
Despite having the lowest annual house price growth rate, London’s average house prices remain the most expensive of any region in the UK, with a record average price of £544,000 in July.
The North East continued to have the lowest average house price at £163,000, which is a record high for the region.
Reaction
Karen Noye, mortgage expert at Quilter:
“The latest UK house price index shows the market remains rather unpredictable as the average house price increased by 15.5% over the year to July 2022, a huge jump on the 7.8% increase seen in June 2022. This is the highest UK annual inflation rate since May 2003. While this increase appears stark at first glance, it is worth noting the jump was largely as a result of the fall in prices seen this time last year due to changes to the stamp duty holiday. Even still, the average UK house price now sits at £292,000 – a whopping £39,000 higher than this time last year.
“The housing market has so far remined resilient despite the ongoing cost-of-living crisis. While the latest UK inflation data released this morning showed a slight fall to 9.9% last month, a higher peak is still expected to materialise over the coming months and as such the Bank of England is expected to continue hiking interest rates and the current resilience may well falter as a result.
“Coupled with rising interest rates, soaring energy prices will also make buyers more cautious. While Prime Minister Liz Truss has now introduced a £2,500 cap on energy prices, many will still feel the squeeze financially and this could put a halt on people’s plans to move home.
“Whether these ongoing issues translate into a fall in house prices will not be seen for some time yet, though this may well be the case if the winter proves to be as difficult as predicted.”
Hans Christian Zappel, cofounder & CEO of real estate technology platform IMMO:
“This unabated growth in house prices, combined with affordability challenges and spiralling debt prices, means the average household is having to reconsider its house purchase decision for the coming months.
“House price growth reflects and affects consumer confidence. Successive interest rate rises and talk of a recession are expected to slow down demand for buying properties in winter months. The summer tends to be a peak in terms of pricing.
“Even with unaffordable house prices, we all need a place to live, so we expect demand will shift from buying to renting, which offers more flexibility. Unfortunately, the shortage of good quality supply of rental properties doesn’t help the situation. There’s an urgent need for the Government to look at controlling debt prices and consumer affordability, while at the same time, for professional landlords to start offering safe, affordable and quality rentals for the UK market.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“The surprise slight dip in inflation to 9.9% is encouraging although it remains well above the Bank of England’s 25 target and further interest rate rises are still on the cards.
“With 95.5% of mortgages taken on fixed rates during the second quarter of the year, according to the Financial Conduct Authority, borrowers envisage further rate rises and are taking action to protect themselves.
“Lenders are pulling rates to maintain service levels as much as to reprice upwards, while there is growing concern around affordability and borrowing potential. Advice is more important than ever, particularly if borrowers have more complex mortgage requirements.”
Kay Westgarth, head of sales at Standard Life Home Finance:
“The latest house price data from the ONS paints an interesting picture for the markets, with house price growth slightly bouncing back from a recent trend of slowing down. Many are holding their breath waiting for a real slowdown in the market, but today’s data suggests that changes, when they come, will be more gradual than dramatic.
“House prices remain high but we know that affordability is being squeezed with residential lenders being cautious about their decisions in light of rising inflation. While over-55s who have been in their houses for twenty or thirty years are likely to be somewhat protected against this, they are more likely to be on a fixed and potentially tighter income so are therefore likely to feel the impact of inflation in different ways.
“In the current climate, many older homeowners will see the benefits of using the equity built up in their home to help boost the potential for family members to take a first step onto the property ladder or increase their own financial resilience for example, however it is vital that specialist advice is taken to ensure they make the right choice for their individual circumstances.”
Simon McCulloch, chief commercial & growth officer at Smoove:
“July’s figures demonstrate the underlying strength of the UK housing market. While the cost of living crisis and associated Bank of England interest rate hikes continues to impact activity, the new administration’s decision to cap energy bills until 2024 will likely boost confidence, particularly around affordability criteria.
“The dynamics of the UK property market continue to be determined to some extent by a lack of supply, which should prop up prices to a degree even in the event of a prolonged recession.
“However, transactions are still taking too long to complete, and this has a knock-on effect throughout the market.
“Streamlined processes are needed to encourage buyers to begin their home-moving journey and eliminate the stress and unnecessary complexity often associated with the experience. By embracing new technology and digitisation, all parties – from lenders and buyers to solicitors and estate agents – can benefit from an improved, more efficient home-moving process, which in turn will keep the property market moving, even in difficult times.”
Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco:
“The July data has been skewed by the Stamp Duty holiday so needs to be taken with a pinch of salt. The reality is that the property market has been slowly cooling in recent months as the nation is gripped by an unprecedented cost of living crisis.
“We’re also seeing valuers start to get more conservative due to the strong economic headwinds.
“With more rate rises a nailed-on certainty and the cost of living crisis set to worsen as we enter the winter, the property market will likely see modest price growth between now and the Spring.
“Higher mortgage rates and the immense pressure on household finances are also likely to result in demand dropping off in the months ahead. As ever, though, the lack of supply will support prices and prevent a pronounced fall.”
Imran Hussain, director at Nottingham-based Harmony Financial Services:
“Anyone hoping for a massive drop in prices and to snap up a bargain will be in for a shock. Though activity levels have calmed down slightly, demand is still there.
“Curiously, activity may even ramp up again now that everyone knows what’s happening with their utility bills for the next two years.
“The rate of property price growth will likely level off in certain regions of the country but areas that are in high demand will always command a premium. And even though mortgage rates are rising, in many cases it’s still cheaper to own than to rent.”
Ross Boyd, founder of the always-on mortgage comparison platform, Dashly.com:
“England won the Rugby World Cup the last time annual price growth was this high but clearly the numbers have to be put into context and viewed against the backdrop of changes to the Stamp Duty regime.
“The property market is going to be put under growing pressure in the months ahead, but we’re still unlikely to see prices fall due to the lack of homes on the market and shortage of properties being built. Expect modest or negligible price growth in the short-term rather than a market collapse.”
Nicky Stevenson, managing director at national estate agent group Fine & Country:
“Just when you thought a slowdown was coming, the housing market accelerates back into overdrive.
“The rapid cooldown in prices predicted by many economists has simply failed to materialise.
“In fact, quite the opposite appears to be happening, and what’s increasingly clear is that the housing market and the broader economy do not always move in sync.
“Looking across the regions, it speaks volumes about the resilience of the overall market that the lowest annual growth, which was recorded in London, was still almost in the double digits.
“With tax cuts expected in the coming days, many experts may find themselves urgently revising their forecasts for the remainder of 2022.”
Edgar Rayo, chief economist at London-based finance broker, Finanze:
“The housing market is already being battered by supply chain issues that have fuelled the increase in construction prices, while build-cost inflation continues to squeeze developers’ margins.
“Adding to the distress is the fourth consecutive monthly drop in new buyer enquiries, according to The Royal Institution of Chartered Surveyors’ (RICS) survey results released last week.
“With global property downturns growing, UK real estate builders have yet to see a rise in consumer confidence equal to pre-pandemic levels given the painful cost of living that is hammering households’ finances, as well as the withdrawal of the Help to Buy equity loan scheme by the Government.
“They will have to contend with higher borrowing costs in the coming years as surging inflation will drive the Bank of England to further raise interest rates before the year ends.
“Further interest rate hikes by Threadneedle Street will eventually slow down the surging growth in housing prices. This means that those who are planning to purchase their homes must swiftly act now in anticipation of higher interest rates in the coming months.”
Mark Robinson, managing director of Southampton-based Albion Forest Mortgages:
“Even as we enter a very dark winter for the economy, I cannot see house prices falling due to the sheer lack of supply. We are, however, far more likely to see a slower rate of house price growth. Though there is slightly less competition than a year ago as some prospective buyers put their plans on hold amid the cost of living crisis, it’s still a sellers’ market.”
Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial:
“Property transactions are definitely slowing down and may well fall off a cliff over the coming months. Not only is autumn and winter a slower period, but the economy is giving people the jitters.
“Nervous people sit tight, they don’t entertain what is often the biggest financial transaction of their lives. However, despite the economic situation, I don’t expect a material reduction in prices as homeowners will want to recoup what they have spent on their homes during and after lockdown so are unlikely to sell at a discount. We are more likely to see house prices flatline.”
Dominik Lipnicki, director of Your Mortgage Decisions:
“Even though the latest inflation data published Wednesday showed a slight drop-off, it’s still extremely high and most predict it will rise even further in the months ahead.
“Together with higher mortgage rates, the cost of living crisis will without doubt have an effect on house prices. Few expect a significant fall but a a very slight increase in the rate of price growth over the next 12 months is a likely scenario.”
James Miles, director of Exeter-based broker, The Mortgage Quarter:
“There’s no doubt we will see a slowdown in the market as the cost of living crisis hits buyers in the pocket where it hurts. With supply still so low, I do not expect prices to reduce but rather for price growth to level out.
“The property market certainly needs a stable period because prices have become silly since the Stamp Duty holiday, with monster growth over the past couple of years.”
Ross McMillan, owner at Glasgow-based Blue Fish Mortgage Solutions:
“Though the property market remains in a relatively healthy state for now, there’s nowhere near the frenzied activity that has defined the market during the past couple of years.
“We’re typically now seeing just two or three buyers competing for a property rather than two dozen, as was the case this time last year. In some instances, some old-fashioned negotiation between a single buyer and seller is now making a comeback.
“While there is still a general lack of supply, sellers’ expectations are also becoming more reasonable and generally more in line with valuations. The current flattening in the market and greater equilibrium between buyers and sellers is a good thing and in the past month I have had several clients make successful offers after some had been looking and offering unsuccessfully for over two years.
“Unlike the Global Financial Crisis of 2007/08, arguably the most important element of the housing market is that it remains fluid and functional so while prices may stagnate or fall slightly due to the cost of living crisis, I am confident that demand will remain and transactions will continue, albeit at lower levels than the past two years.”
Mike Staton, director of Mansfield-based Staton Mortgages:
“I think we will see house prices increase further as there is still demand out there, although there will not be 10 to 15 people going for the same property as there have been during the past two years or so.
“However, there are still enough buyers to keep it a sellers’ market in my opinion. Only too often I see estate agents try to justify marketing valuations based on Rightmove or Zoopla data, which simply isn’t accurate.
“Last week we had a client’s purchase downvalued by £30,000 only for the estate agent in question to show us marketing prices for comparables and not completed prices.”
Lewis Shaw, founder of Mansfield-based Shaw Financial Services:
“First-time buyers have been leading the way in recent months. The volume of enquiries and calls we’re getting remain at record levels, which is starting to feel a bit odd given the cost of living crisis and rising interest rates.
“It should be getting quieter, yet we’re seeing the opposite. With two years of breakneck house price growth, it’s as though the property market has uncoupled from the economic train and is now freewheeling down the tracks without any brakes. Let’s hope for a gradual slowdown rather than crashing into the barriers.
“The fact that we’re now seeing loans for prime borrowers nudge over 5% may well start to see demand fall slightly and result in a cooldown rather than a crash.”
Gareth Lewis, commercial director of property lender MT Finance:
“House prices tend to rise where there is demand combined with lack of stock and these figures illustrate that.
“What we are seeing now are those pressure points of rising interest rates and the cost of living which haven’t yet been factored into transactional flow. Purchases which completed in July would have been agreed in April where many would have been blissfully unaware as to what was to come.
“This price growth is unsustainable because of the impact of affordability and what buyers are willing to pay for a mortgage. This, in turn, will have a dampening effect on values, which could be the tipping point for the market.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Although the numbers are strong, it’s a little early even for this, the most comprehensive of all the housing market surveys, to reflect the change in activity we’ve seen on the ground in the past few months.
“The balance of power is shifting more towards the buyer but what these numbers do show is that there is still plenty of underlying strength which will mean a serious price correction is less likely. A gentle softening has been happening and is likely to continue to do so over the next few months.”
Paul McGerrigan, CEO at national fintech broker Loan.co.uk:
“This has been an exceptional time for the property market which has shown continued robustness and growth despite exceptionally challenging economic times.
“July’s strong monthly house price growth, up 2% on June, and a leap of 15.5% over the year, indicates there is still no sign of the market slowing.
“The average property price now stands at more than £292,000, and prospective homebuyers will be watching prices with great interest.
“Whilst there is still evidence of strong demand, and supply issues with fewer properties coming up for sale, there are some early indications that the market is beginning to cool, but only time will tell in these unprecedented times.
“The rental market remains strong, driven by the fact certain parts of the population cannot get on to the property ladder. High demand for rental properties ensures the buy-to-let market continues to fly, helping to drive prices ever upward.
“What this all points to is an increased segmentation of the market between people who are heavily impacted by the Cost-of-Living Crisis and those who are not. We watch with interest to see what the government does next in the property space with regards to taxation.
“As ever mortgage advisers need to proactively engage clients, to ensure they make the right borrowing decisions at this critical time in the market.”
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown:
“House price growth has doubled in a month, growing faster than for 19 years, but all is not what it seems. This is the latest step in a house price Hokey Cokey, and is the result of changes to the stamp duty holiday last summer. It doesn’t affect the outlook for the market, which is facing real challenges.
“Distortions from the end of the most generous period of the stamp duty holiday last June are playing an enormous role in price rises. There was a burst of demand last June, and people rushed to get sales over the line before the deadline – pushing prices up.
“As a result, we had a lull in July where prices fell back month-on-month and annual rises slowed to 7.1%. We’ll see echoes of this through the next few months, as we get another bump and a dip from the end of the stamp duty holiday in September last year.
“Higher prices were being sustained by a shortage of supply. With an average of 36 properties on each agent’s books, we’re still close to an all-time low in the availability of property for sale.
“However, underlying demand is getting weaker. It has been falling since May – the longest stretch of shrinking demand since the onset of the pandemic, and mortgage approvals were below pre-pandemic levels. If these trends in demand continue, it’s only a matter of time before we see price rises slow significantly.
“The announcement of the Energy Price Guarantee, raises the question of whether it will be a shot in the arm for the market.
“The fact that we won’t see unspeakable energy price rises in October or January will have come as a relief to millions of people, and may well have eased concerns about rising prices this winter for some buyers. However, there are still very good reasons why it may not be enough to significantly alter predictions of a property market slowdown.
“Even at this level, sky high bills will be a stretch for millions of people, and the relentless rise in the cost of food and other household bills will put us under even more pressure. Meanwhile, if the Bank of England raises rates again next week as expected, it’s going to make higher house prices even less affordable. We can expect the maths to stop adding up for increasing numbers of buyers, and their mortgage lenders, which could dampen price rises.
“We’re likely to reach a tipping point if we hit a recession. Growth was flat for the most recent quarter, and lower than expected, so while we haven’t tipped over into a shrinking economy, we may well be on the verge of it.
“High employment levels have been key to the health of the property market, so if jobs become increasingly insecure it could make all the difference.”
Iain McKenzie, CEO of The Guild of Property Professionals:
“The cost of living is surging across almost every aspect of our lives, but these unprecedented rises in house prices continue to defy expectations.
“The latest figures showing the highest annual growth rate in almost 20 years will be particularly discouraging for first-time buyers, with many already struggling to save for a large enough deposit.
“To put it into perspective, the average house will now set you back almost £40,000 more than it did a year ago. That’s £40,000 extra that buyers will need for a mortgage to get them on the property ladder.
“The coming months will be crucial to see just how this trend plays out. This time last year, the effects of the stamp duty holiday winding down brought a slight cooling effect on the market, which could explain why we have seen such a big jump in annual price inflation.
“While it’s easy to assume that an adjustment to the market is on the horizon, history shows us that significant falls rarely happen year-on-year. The demand for good quality housing remains robust, we just need to see the cost of living come down to ensure that confidence in buying stays buoyant.”
Emma Cox, MD of real estate at Shawbrook:
“Despite economic headwinds and financial challenges such as the cost-of-living crisis having an impact across the UK, the appetite from buyers remains strong and house prices are still robust as a result, which is reflected in the price rises in July.
“However, with soaring inflation, rising interest rates and a recession predicted in the near future, a cooling of house prices is likely, and the market may restore some sense of balance. With demand still heavily outweighing supply, an influx of quality, affordable housing is needed to alleviate the pressures currently facing the housing landscape.
“This is also having an effect on the rental market, with increasing demand and costs likely to be absorbed into rental payments. Now could be a good time to secure mortgage deals and protect against future interest rate rises.
“Market constraints will be hard to overcome without clear support from the government. Focus will be on the new prime minister to understand how the market will be supported over the coming months.”
