House buyers frustrated as prices rise for 11th consecutive month

interactive investor comments on the latest Halifax House Price Index.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The price of an average house in the UK is now as expensive as it has ever been, standing at just over £289,000. Although the red-hot housing market has started to cool in recent months, it remains tough out there for buyers. Prices are rising more slowly than they did at the start of the year, but growth remains in double digits.

“The housing market continues to be buoyed by strong demand for homes, which far outstrips available housing inventory. It could take years for the supply of homes to return to normal after housebuilding ground to a halt at the height of the pandemic.

“Rising mortgage rates, with the Bank of England having upped base rates four times in six months and appearing set to go further, have also pushed many buyers to the sidelines. Prospective homebuyers’ attempts to build up an ample cash pot to purchase a property is increasingly being thwarted by the cost-of-living crisis, with inflation surging to 9% in April and expected to reach double digits before the end of the year.

“The worry is that high home prices and affordability pressures could result in buyers getting in over their heads just to get on the property ladder.

“Those who have been priced out of the property market will hope the slowdown will ultimately lead to a fall in prices. Rising borrowing costs coupled with more housing inventory could result in slower home price growth, but it could be some time before we see declines in prices.”

Key points:

• House prices increased by 1.0% in May, the 11th consecutive monthly rise.
• Average house price record set again, now £289,099.
• Annual house price inflation edges down, although remains in double digits.
• House prices have risen 74% in the last 10 years.