The average house price remained at the record high of £278,000 in March – up £24,000 in a year, according to the latest figures from the ONS.
Average house prices were up 9.8% in the year – down from 11.3% in February. It has backed off from the high point of 13.3% in June last year.
Detached house prices were up 13.7%, and semi-detached were up 11.1%, while flats were up 4%.
New build prices were up 19.9%. Average house prices in London were still the highest in the UK, at £524,000.
Prices in the East Midlands saw the highest annual growth at 12.4%, while London saw the lowest annual growth of 4.8%.
Prices in the North East remain the lowest in the country, at an average of £155,000.
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said: “House prices paused in March, with the average sitting at around £278,000, but this isn’t the peak of a rollercoaster. In the coming months, we may see the market dynamics start to shift. But right now it looks like it’s going to be more of the gentle undulation of a tame toddler attraction than the big drops of a thrill ride.
“Average annual price rises have bounced in and out of double digits for almost a year now, so a single monthly drop isn’t the canary in the coalmine. It’s not the first monthly pause in the relentless rise of average prices either.
“There are still plenty of signs of strength in the market that have come through since March, with sales remaining brisk, mortgage approvals running above pre-pandemic levels, and the number of buyers still growing – and continuing to dramatically outnumber sellers. Zoopla figures out yesterday also show rents rising an astonishing 11% in a year, helping to fuel demand from first-time buyers determined to escape the rent trap.
“However, it’s only a matter of time before we see house prices slow on a more sustained basis. The latest RICS report showed that the number of buyers continued to rise, but that they were getting a bit more cautious. Even if they’re still keen to buy, mortgage companies are increasing rates and boosting the assumed costs in their affordability calculations, so there’s going to come a time when it gets harder for people to get a loan.
“It means buyers right now have every reason to be cautious. There’s no reason why anyone should halt the hunt for a home they can easily afford. However, if you’re stretching your finances to the limit, it’s vital to think carefully about whether it’s a sensible move at a time when the price of everything is on the march.”
Further reaction
Emma Cox, managing director of real estate at Shawbrook:
“A slowdown could be on the cards for the property market with inflation close to hitting double figures in April. With concerns over rising costs impacting consumer confidence, it’s likely that many will pause their property plans. However, for now the property market remains in good stead, despite recent economic outlooks.
“Demand continues to be high, outweighing supply in the market, leading to competitive bidding wars that are pushing prices up further. More quality supply is clearly needed in the market, but with the cost of material and labour on the rise, new properties are likely to continue to edge prices further up.
“For those waiting to get onto the property ladder, the private rental sector will play an important role in offering safe and secure housing. Landlords will be keen to adapt their properties in order to suit tenant demand. Energy efficiency will be a priority, particularly with the EPC proposals currently on the table and rising energy prices.
“Tenants have already started to look for properties with bills included within the rent in order to mitigate against any future rises. Landlords looking to attract tenants and stay compliant will likely be expediating their renovation plans to improve the EPC ratings of their properties.”
Peter Beaumont, CEO of The Mortgage Lender:
“March has, again, withstood fears of slowdown in the property market continuing the trajectory of high momentum and price growth. Motivated buyers are still driving demand and bidding wars are pushing prices further.
“However, with UK GDP falling in March and the cost of living eating into incomes there is a real concern that the market’s performance over the last few years has run its course. Many are expecting buyers’ appetite to buy to reduce, while affordability will become an even bigger obstacle for many looking to step on or up the ladder.
“Responsible lenders will be paying close attention to affordability checks and will need to prudently assess each applicants’ real-life circumstances and ensure they can cope with further rises in costs expected in the short-term.
“For those homeowners nearing the end of their fixed term, re-mortgaging will be a priority as further rate increases are expected from the Bank of England in the coming months to combat rising inflation and a shrinking economy.”
Nathan Emerson, CEO of Propertymark:
“The year-on-year increase shows there is still plenty of momentum within the housing market, however we are now seeing some signs of things starting to cool.
“But we keep coming back to the issue of low supply being the main driver of rising prices. Our member agents are telling us that it’s still an issue and that the number of people looking to buy remains far higher than the number of properties they have listed. This, coupled with incredibly low borrowing rates, is likely to maintain prices in the short to medium term.”
Nicky Stevenson, managing director at national estate agent group Fine & Country:
“This data indicates that house price correction may be gradual rather than sudden despite the headwinds which are multiplying in the broader economy.
“While the housing market is certainly approaching a crossroads, new instructions remain thin on the ground and supply bottlenecks persist around the country.
“As spiralling inflation and increased borrowing costs continue to stretch buyer affordability, we expect to see more evidence of house price moderation in the months ahead.
“But mitigating this will be the strong appetite which remains among existing homeowners to trade-up.”
Lucy Pendleton, property expert at independent estate agents James Pendleton:
“This market is still flying above the rest of the economy but the latest figures suggest a contraction might not be too long away.
“Annual growth has dipped below double figures at 9.8% and some regions are starting to see monthly declines. London, which has been a laggard during the last two years, may be the canary down the coal mine, recording a 0.9% price drop from February.
“Yet, compared with flagging consumer confidence levels, these results are still buoyant and demand remains ahead of supply, partly thanks to a shortage of new-build properties.
“Mortgage approvals are also still rising – with many house buyers trying to lock down deals before rate rises kick in across the board – so it seems hard to imagine anything but a slow decline.
“Average UK house prices might tip over the £300,000 mark before then, particularly if the government follows through with its plans to guarantee first-time buyer mortgages.”
Karen Noye, mortgage expert at Quilter:
“The Government’s UK house price index for March tells much the same story as other indexes have done for the last few months, which is that the steady march of increasing house prices is coming to an end. They do however still remain extortionately high. The average house price in the UK increased by 9.8% in the year to March 2022, which is down from 11.3% in the year to February 2022.
“With inflation now sitting at 9% as of this morning and people suffering with the worst food and energy price hikes for decades it is likely that house prices will continue to drop. However, whether they drop low enough to make the prospect of homeownership a remote possibility for ‘generation rent’ still remains unlikely.
“At the weekend, Secretary of State for Levelling Up, Housing and Communities, Michael Gove, attempted to address what the government is going to do to help first time buyers. One of the potential solutions tabled was the introduction of a Canada-style insurance policy against defaulting in order to get lower mortgage rates which would help boost home ownership among those with small deposits. Although this seems to be in early stages.
“We have seen time again government housing schemes falling very far from the mark even if well-meaning. A good example is Help to Buy, which has for some been disastrous and contributed to lining the pockets of housebuilders while not actually helping as many people as hoped.
“However, Gove did touch on a very important solution, which is building new homes in areas that people actually want to live rather than soulless out of town developments. Doing this would be far more powerful than tinkering around with ways to help people finance their first home. Although this point does need to be addressed the problems young people and renters face across the nation are akin to Frankenstein’s monster with every housing policy or proposal ultimately making the beast harder to tame.
“A good example of this is the stamp duty holiday which did very little to help first time buyers bar putting house prices even further out of reach. The only tried and tested way of helping people buy their first home is by sticking to the laws of supply and demand. Simply put if you build more desirable houses, prices come down and people have a fighting chance of getting on the housing ladder.
“The UK is facing a severe financial problem and while the housing market managed to overcome the immediate problems of the pandemic it may not fare so well in this economic climate.”
Conor Murphy, CEO and Founder, Smartr365 :
“In spite of interest rates, the price of property, and the wider cost of living all rising significantly, there is reason to be optimistic. The property market remains a central driver of the UK economy, so it’s reassuring to see it retain its high demand and activity levels.
“However, with prices increasing across the board, homebuyers will be keen to lock into mortgage offers before they disappear. Innovative mortgage tech will be key to ensuring this is done so quickly, safely, and efficiently, alleviating pressure on brokers.”
Alex Lyle, director of Richmond estate agency Antony Roberts:
“The imbalance between supply and demand continues to fuel strong house price growth in Richmond. The £1.5 m-plus freehold house market has been well received this year, with any sensibly priced family home attracting interest from a number of buyers, resulting in multiple bids and an agreed sale in excess of guide price.
“Below that threshold, it’s a more typical market. Good addresses sell well, while compromised or overpriced homes tend to stick. The now-regular increases in interest rates and rise in living costs have yet to make any significant impact but there might be signs of things slowing. The historical pick-up in supply after Easter has yet to materialise and this reduction in choice, plus increasing financial pressures, may see some buyers step back.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“With inflation hitting 9%, cost of living increases alongside rising base and mortgage rates is causing concern around affordability and borrowing potential, as well as the potential knock-on effect to house prices.
“Lenders remain keen to lend with a number making tweaks to criteria to enable this to happen, such as Nationwide raising its loan-to-income cap on like-for-like remortgages, while still ensuring they are lending in a responsible way.
“Mortgage rates remain competitive although they are on the rise. Borrowers need to move quickly to secure the best rates as they are often pulled at short notice.”
Melanie Spencer, head of finova Payment and Mortgage Services at finova:
“A lack of sufficient housing supply has continued to drive up property prices in March. Yet, in the coming months we can expect homebuying activity in the market to slow as surging inflation and the ongoing cost of living crisis continue to dent people’s savings and leave their finances stretched.
“Following a record-breaking two years, brokers will now be feeling challenged in new areas as they support clients facing financial difficulty. For first-time buyers and movers attempting to navigate the property ladder, rising bills paired with higher interest rates may set back their housing plans, while others will need support with remortgaging.
“During what will still be a busy time, mortgage clubs will be on hand to support stretched brokers with market-leading technology designed to automate tasks. This will help them keep on top of their workloads and give them more time to support their clients who are in need.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“Although this is the most comprehensive of all the UK’s housing market surveys, it is a little historic. Nevertheless the figures interestingly highlight the beginning of the change in the supply/demand balance.
“Rising interest rates and inflation contributing to a drop in real incomes is resulting in a reduction in quantity, if not quality, of enquiries.
“We don’t expect property prices to fall noticeably anytime soon while the huge shortage of stock in some price ranges and locations remains, particularly as so many are still on fixed-rate mortgages or do not need to arrange finance.”
Anna Clare Harper, director of real estate technology platform IMMO:
“With UK HPI data showing annual house price growth of 9.8% to £278,436, many wonder why house prices remain so buoyant in the context of post-Covid, post-Brexit and mid-Ukraine turmoil. Much like for the wider economy, house price inflation is being driven by shortages of supply. This shortage relates to housing in general, and to quality housing that people can afford, in the places they want and need to live, in particular.
“The shortage of suitable, affordable housing is being made worse by planning backlogs from lockdown alongside labour and material shortages and inflationary pressures, as well as the fact that many new-build schemes are unaffordable to local people. Construction material prices rose by over 20% (including 10 to 15% inflation in the first quarter of this year according to The Construction Leadership Council). So, the trend is unlikely to reverse any time soon.
“The result is an ongoing and growing constraint on the affordability of home ownership. In England, full-time employees could expect to spend 9.1 times their annual earnings on purchasing a home in 2021, and this figure is not improving with the latest HPI data highlighting that house price growth continues to outpace wage growth.
“This rate of inflation increases the importance of the Private Rental Sector, which is essential for providing safe, quality housing to millions of people and families for whom home ownership is not the right path to follow.
“This is a major reason why we are seeing growing appetite from investors such as pension funds, which increasingly realise they play a major role in plugging the gap in quality, affordable homes for people and communities across the UK.”
Paul McGerrigan, CEO at online broker Loan.co.uk:
“UK property prices continue to increase, but growth has slowed significantly as many would argue it needs to. The continuing undersupply of property, the increased desire for space and the growth in home working are all stubbornly driving this continued growth against tough economic conditions pushing in the other direction.
“Increased mortgage costs, rising household bills and concerns over the ongoing impact of the war in Ukraine and geo-political tensions will undoubtedly continue to cool the market. The question – How quickly and dramatically will the market slow or will it stall or indeed fall? All eyes on the Bank of England’s MPC which need to tread a very careful line.”
Gareth Lewis, commercial director of property lender MT Finance:
“The gap between supply and demand continues to push average property prices higher, although the pace of annual and month-on-month growth is slowing. This is no surprise as the cost of living also continues to rise, with buyers having to find more money to purchase their dream home, while at the same time paying more for everything else.
“Continuing rising property prices don’t really help anyone – they may make homeowners feel richer but if you are trying to buy a home, the task becomes even more challenging. Those trying to move up the ladder are finding it harder as the trading gap grows wider and the home they are moving to becomes relatively more expensive. First-time buyers are finding it even more difficult, with even more money required for a deposit.
“Some reform to stamp duty, perhaps removing the need for downsizers to pay it, needs to be considered to stimulate the market and increase supply, which will help keep prices in check.”
Richard Pike, Phoebus Software sales and marketing director:
“The headline figure from the ONS today is one that is no surprise to anyone. We can all see how much prices are rising, almost at every turn. When you drill down and see the effect housing and household services is having on the overall CPIH figures, which mainly is driven by the increasing price of electricity and gas since the cap was changed in April, you can see how this is hitting everyone right in the pocket.
“When it comes to affordability there is one thing that people can fix the price of, and that’s a mortgage. In a world when inflation is spiralling it makes sense to fix now and at least know there is one bill each month that will not be going up. This does mean that lenders will be under pressure to provide the longer-term fixes people are looking for, whilst also looking out for more vulnerable borrowers.”
