The average price for a home in the UK increased by £24,000 in the year to January reaching £274,000, according to the Office for National Statistics (ONS).
The average price of a house in England now stands at a record £292,000 while Wales increased by 13.9% over the year to a record £206,000.
Prices in Scotland increased by 10.8% with the average house price now standing at £183,000.
Northern Ireland remains the cheapest country in the UK to purchase a property in, with an average house price at £159,000
Overall, UK average house prices increased by 9.6% over the year to January 2022. Down slightly from the 10% recorded in December 2021.
London remains the region with the lowest annual house price growth with average prices increasing by 2.2%.
Despite being the region with the lowest annual growth, London’s average house prices remain the most expensive of any region in the UK, with an average price of £510,000 in January 2022.
The North East continued to have the lowest average house price at £151,000.
Reaction
Chris Hutchinson, CEO of rental platform Canopy:
“House prices are still on the rise amidst a challenging time for all financially. The current cost of living crisis is undoubtedly adding to the nervousness of many potential homebuyers.
“With limited options available and the fear of not being able to keep up with the mortgage repayments and new home costs, many are choosing to avoid all together for now.
“Of course, there are many who choose to rent, but there are others who may currently feel trapped in a constant cycle of renting as they struggle to get themselves onto the property ladder.
“Tenants must feel like they are benefitting from their rental payments, boosting their credit score and improving their financial wellness. Having rent count towards a credit score can be so important, especially in the current climate, as having the extra edge over the competition can make all the difference.“
Samuel Gee, director at Bristol-basedManning Gee Investments:
“Prices may have dipped very slightly but the market is still powering on. There is an unprecedented lack of stock currently, with buyers competing intensely for whatever comes to market.
“It’s an unsustainable situation with first-time buyers simply priced out of the market. The cost of living crisis will only exacerbate this problem, as lenders will be more careful when taking longer term affordability into account. Something somewhere will have to give and interest rate rises could turn the current property bull market into a bear.”
Andrew Simmonds, director at Bristol-basedParker’s Estate Agents:
“In Bristol, Somerset and the West Country, as in most of the UK, there is an extraordinary lack of stock and this is supporting prices. Any properties that do come to the market are sold quickly, often in a matter of days or even hours, when marketed at the right asking price.
“The vast majority of homeowners with a mortgage are on a fixed rate, so the impact of recent rate rises won’t be instantaneous. The awful situation in Eastern Europe may well deter the Bank of England from raising interest rates much more for now. Threadneedle Street won’t want to exacerbate any pressures on the UK economy caused by the conflict.”
Lewis Shaw, founder of Mansfield-basedShaw Financial Services:
“Winter is coming, to quote the Game of Thrones. I warned 12 months ago that we had a nasty recession coming down the tracks due to the impacts of Covid and Brexit. Nevertheless, prices kept rising and mortgage balances grew with a frenzy of activity made worse by greedy, near parasitical estate agents.
“Now we’re about to reap what a lot of people have sown, and it’s going to get very ugly indeed. And this is before the impact of Ukraine was factored in. Will house prices reduce? Unlikely as the structural supply-side issue gets worse by the day, which will keep values buoyant.
“However, with the massive, and I mean enormous inflation in energy, food and fuel, unless we have large-scale government intervention, there will be a rise in homeowners in default as they choose between paying their mortgage or food and fuel bills. Karl Marx said that history repeats itself, first as tragedy, secondly as farce. We’re in for both at the same time.”
Rhys Schofield, managing director at Belper-based Peak Mortgages and Protection:
“House prices may have edged down slightly but they’re still frighteningly high. The property market is broken, kaput.
“There are more buyers than houses and any increases in interest rates is merely tinkering round the edges as it doesn’t solve the issue around the lack of supply.
“The alternative to buying is renting but when rents are going up even faster, the lack of property becomes a real issue. It’s all very well house prices going up but those fortunate enough to be on the property ladder are leaving a heck of a lot of people behind.”
Graham Cox, founder of the Bristol-based Self-Employed Mortgage Hub:
“I believe the decade-long property bull run is coming to an end. It’s true that chronic undersupply of housing stock remains but it’s only insanely cheap credit that is underpinning demand, and we’re now moving to a much higher interest rate environment.
“The cost of living crisis means lenders are already tightening their affordability criteria. People simply won’t be able to borrow as much, which means lower offers, particularly from first-time buyers.
“Put it all together, and I’ll be surprised if prices don’t start falling materially in a few months’ time.”
Rich Horner, head of individual protection at MetLife:
“The housing market continues to prove challenging for both first time buyers and those looking to grow their property footprint. Despite very little support for those looking to either get their foot onto the property ladder, or move up a rung, buyers show no signs of abating their search for more space. This alone continues to inflate housing demand and asking prices.
“As inflation and the cost of living continues to soar, buyers, particularly first-time buyers, run the risk of being frozen out of the market. For all potential buyers, securing a competitive mortgage with a fixed rate will be essential.
“But once you’ve been handed the keys to your dream home, it’s vital that homeowners ensure they’re protected to avoid any heartache should the worst happen and they’re unable to meet their repayments. Perhaps even more so given the uncertain backdrop at present.
“With one in five (19%) UK adults – equivalent to more than 10 million Brits – admitting they’re not financially resilient, mortgage cover and financial protections are a necessity.”
Tomer Aboody, director of property lender MT Finance:
“To see why house prices continue to perform so strongly, even while interest rates are rising, you need to look at sales volumes, with half the number of transactions taking place in November 2021 compared with the same month the previous year. This dramatic fall in transactions illustrates why prices continue to rise – lack of supply, combined with high demand is going to push values up to record levels until something changes.
“The government needs to do something with stamp duty to incentivise downsizers to release family homes onto the market in order to increase the number of transactions, helping keep price increases in check.
“It is not surprising to see Wales continuing to have record increases in prices as the numbers are starting from a lower base. Any increase in prices is going to be more dramatic than cities such as London where the rise in values is still relatively high but not as much as in the regions.”
Emma Cox, Managing Director of Real Estate at Shawbrook:
“House prices continue to challenge any sense of normality despite rising inflation and the soaring cost of living forcing a reality check to buyers’ budgets. Record prices and undiminished demand is putting the pressure on buyers that aren’t seeing their money go as far across the board.
“Yet, the outlook does remain positive for those looking to sell. The market remains firmly in favour of those with capital available and looking to add to portfolios or let out properties.
“Although, recent hikes in energy bills and running costs will have to be factored in, socially responsible landlords will be aware of the changes they can make to their portfolios in order to limit the impact of energy price rises in the future for tenants.
“The market is in desperate need of a steady stream of high quality, affordable, housing to rebalance the market and help those struggling to purchase a property. This will help to steady house prices that currently see the sky as the limit.
“It is important that the government continues to focus on delivering its Levelling Up Agenda. This will benefit our local communities, making the path to homeownership possible and improving living standards.
“By restoring a sense of community and spreading opportunities in the regions, this will create more demand for rental properties from landlords across the board.”
Karen Noye, mortgage expert at Quilter:
“The latest UK house price index shows house price growth has continued to slow, but prices are yet to start falling. On a seasonally adjusted basis, the average UK house price increased by 0.7% between December and January and was up 9.6% over the year to January 2022. The average house price reached £274,000 in January, £24,000 higher than the same time last year.
“Despite the slight uptick in month-on-month house prices, it still seems inevitable that a slowdown and subsequent fall in house prices is on the horizon given the current fiscal pressures we are facing.
“This morning’s CPI data showed inflation now sits at an eyewatering 6.2%. Last week the Bank of England hiked interest rates to 0.75% in an attempt to combat the soaring figure, and the knock-on effect will be costly for prospective homebuyers and those looking to remortgage.
“Many people are already feeling the squeeze financially due to soaring inflation and the rising cost of living, leaving many feeling less financially stable than they were before. Lenders are quick to pass on any rate rise to customers, so the increased costs will likely put off prospective buyers and buying a new home or taking the first step onto the property ladder will be pushed out of reach for many. As a result, we could see house prices dip over the coming months.
“What’s more, the Chancellor is due to present his Spring Statement later today and will be announcing measures the government will take to tackle the ongoing cost-of-living crisis.
“There is a clear need for the government to act to help save many from slipping into financial difficulty, but if the measures are not robust enough to alleviate the financial pressures many are currently facing, we could see a fall in the number of people looking to buy a new home which could ultimately cause a slowdown in house prices.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“The bigger than expected jump in inflation, taking it to its highest level in 30 years, and with more to come, will be preying on the Chancellor’s mind when he stands up to deliver his Spring Statement this afternoon.
“The housing market continues to perform strongly with house prices continuing to rise, due to lack of stock. Those buyers who didn’t make their move last year are still keen to do so, assuming they can find the right property, and take advantage of mortgage rates while they remain low.’
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Another day, another survey showing the resilience of the housing market despite concerns about implications of the war in Ukraine, particularly on inflation and interest rates.
“On the ground, existing homeowners whose purchasing power has been buoyed by savings and equity, still remain keen to find homes which fit their post-Covid lifestyle.
“Affordability is more of a factor for those buying for the first time so will have some impact on prices.”
Paul McGerrigan, CEO at national credit broker Loan.co.uk:
“Average UK house prices dipped nearly £1,000 in January, down to £273,762 from the record high in December 2021 of £274,712. However, this is still an annual rise of 9.6 per cent year-on-year.
“Demand remained strong throughout 2021, and mortgage approvals for house purchase continued to run well above the pre-pandemic levels, but the interest rate increase in December and fears of dramatically higher energy bills on the horizon have steadied the market.
“We expect prices to remain firm in the coming months, despite the economic stranglehold of soaring energy costs, rising interest rates and sharp spikes in the cost of goods due to Russian sanctions. Whilst this will put off many buyers, there is still a shortage of supply and demand for more space and higher quality of life will remain a priority to those who can afford it.
“We will watch intently what the Bank of England’s Monetary Policy Committee does with interest rates over the coming months as this will also play a significant part in deciding which way the market goes.”
Nicky Stevenson, managing director at national estate agent group Fine & Country:
“A modest tightening in house price growth has been expected for some time with challenges building across the broader economy.
“Affordability has been stretched by a spike in inflation and the consequential upward pressure on interest rates.
“While the effect of escalating tensions across Europe remains uncertain, energy market volatility may continue to erode household budgets in the months ahead.
“However, the effect of this on house price growth will continue to be mitigated by supply issues with too many buyers chasing too few homes, and not nearly enough new listings to satisfy current demand.”
