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House prices in the UK have risen at their fastest rate since 2007, as the average house price hits another record high.

According to the latest House Price Index report by mortgage lender Halifax, February 2022 recorded an annual growth rate of +10.8%, which is the strongest level since June 2007.

Monthly house price growth rose by 0.5% in February, recording an eighth successive month of increases. The growth pushed the average house price up to a new record high of £278,123.

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Two years on from the start of the pandemic, average property values have now risen by £38,709 (+16%) since February 2020, Halifax said.

It added that over the last 12 months, house prices have increased by £27,215 on average, which is the biggest one-year price growth in over 39 years of index history.

“Lack of supply continues to underpin rising house prices, with recent industry surveys showing a dearth of new properties being listed, now a long-term trend. This may be a particular issue at the larger end of the property market. Over the past year, the average price of detached properties (£43,251, +11%) have risen at a rate more than four times that of flats (£10,462, +7%) in cash terms,” Russell Galley, managing director at Halifax, said.

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“Looking ahead, as COVID moves into an endemic phase and almost all domestic restrictions are removed, geopolitical events expose the UK to new sources of uncertainty,” said Galley, who also pointed out that the war in Ukraine will likely have effects on confidence, trade and global supply chains.

“Surging oil and gas prices are one immediate consequence, meaning that inflation in the UK – already at a 30-year peak – will remain higher for longer. This will add to the squeeze on already stretched household incomes.

“While increases in the bank rate look likely in the near term, the extent of the rises will depend on how it affects prices and companies’ approaches to pay over the months to come. These factors are likely to weigh on buyer demand as the year progresses, with market activity likely to return to more normal levels and an easing of house price growth to be expected.”

By Rommel Lontayao

Source: Mortgage Introducer

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