House prices reach new record high
7th July 2022 07:34
by Myron Jobson from interactive investor
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Halifax House Price Index: growing affordability pressures have not dented demand for homes enough to deter strong price gains.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says “The growing affordability pressures from rising mortgage rates and runaway inflation have yet to dent demand for homes enough to deter the strong price gains happening across the nation. The ongoing supply demand mismatch is continuing to put upwards pressure on house prices, with the price of a typical UK home rising by almost £34,000 in the past year to hit a new record high of £294,845.
“Location, location and location continues to be a significant driver of house price growth. The pandemic induced ‘race for space’ has likely contributed to the large uptick in the price in the average property in the South West, which saw the highest annual house price growth of any region in England. Meanwhile, London continues to lag behind other regions in terms of annual house price inflation, as people seek and value larger living spaces outside city centres. This trend could continue for some time yet.
“Rising house prices are great for homeowners looking to move but the opposite is true for wannabe buyers. Many young adults can’t even dream of buying a home, while a large number of families cannot afford to upsize.
“But there is no doubt that the housing market continues to run hot, defying expectations of a slowdown, with average property prices in June experiencing the biggest monthly rise in 15 years (1.8%), while the annual growth rate of 13% is the highest since late 2004.
“While the current pace of price appreciation doesn’t appear sustainable over the long run, would be buyers shouldn’t hold their breath for a house market crash. The evidence points to house prices dampening rather than tumbling as laws of supply and demand will continue to prevail.”
Key points:
- House prices increased by 1.8% in June, the 12th consecutive monthly rise.
- Annual growth rate of 13% is the highest since late 2004.
- Typical property now costs £294,845, a new record high.
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