Interactive Investor

First-time buyers disillusioned by runaway house prices

16th February 2022 11:07

Myron Jobson from interactive investor

interactive investor comments on the ONS House Price Index.

Commenting Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Many first-time buyers are disillusioned by the perpetual struggle to get on to the property ladder.

“Runaway price rises mean property values are through the ceiling of what many buyers can afford to pay. Add to that surging inflation, which has climbed to a 30-year high and outstrips wage growth, the spectre of higher interest rates to combat it and the cost-of-living squeeze, home ownership will remain a pipe dream for many. And they can’t rely on the Bank of Mum and Dad, which might need extra cash to shore up its financial position amid the escalating cost of living crisis.

“The stock of available homes remains significantly lower than demand for property and continues to drive up prices, forcing many to think twice about moving home. This mismatch is likely to underpin the housing market in the coming months.

“While back-to-back interest rate rises haven’t moved mortgage rates far from historic lows, the prospect of more hikes in the near future and the cost of living has raised the affordability hurdle, which is likely to exert a cooling effect on the housing market.”

Key points

  • UK average house prices increased by 10.8% over the year to December 2021, up from 10.7% in November 2021.
  • The average UK house price was £275,000 in December 2021, which is £27,000 higher than this time last year.
  • Average house prices increased over the year in England to £293,000 (10.7%), in Wales to £205,000 (13.0%), in Scotland to £180,000 (11.2%), and in Northern Ireland to £159,000 (10.7%).
  • London continues to be the region with the lowest annual growth at 5.5%.

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