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UK housing market shows signs of stability with Brits’ reluctant to spend

The UK housing market could be returning to stability, say analysts, before deals pick up as warmer weather blankets the country.

Residential transactions for March have plunged more than a third in comparison with the same month last year, according to the government’s latest figures, after a continued, pandemic-era, buying frenzy.

Although deals have climbed 18 per cent higher than February, HMRC data showed, as gloomier weather recedes.

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“Could this be the turning point with spring and summer upon us when the market finally gets some stability and pricing normalises?,” Tomer Aboody, director of property lender MT Finance, questioned.

It follows the end of the stamp duty holiday, which saw real estate agencies report record activity as buyers raced to climb the property ladder.

Despite the logistics real estate market taking off in the UK, as businesses seek to bring distribution hubs closer to home, non-residential deals sank nearly six per cent year-on-year – but have surged 36.6 per cent in comparison with February.

With non-residential transactions “still trailing behind” their residential counterparts, Aboody urged for business rates reform, in a bid to lure retailers back to high streets after a bleak pandemic period.

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Cost of living squeeze

The levelling out of transactions year-on-year could signal how potential buyers are feeling less reluctant to splash the cash given the UK’s economic and inflationary position.

“The rising cost of living and interest rates, especially for those on tight budgets, are contributing to an easing of price growth and a drop in sales,” said north London estate agent Jeremy Leaf.

However, “Demand still comfortably exceeds supply and correctly-priced houses continue to attract considerable interest while mortgage repayments remain relatively affordable,” he added.

Senior pensions and retirement analyst at Hargreaves Lansdown, Helen Morrissey, chimed, explaining that Brits’ squeezed finances are ‘dampening’ the appetite for new homes.

“Comparisons with last year are tricky with the stamp duty holiday and the pandemic race for space causing a huge surge in activity but while the number of transactions is down on this time last year, it is still a massive 18 per cent up on last month’s figure,” she continued.

“How long the market can maintain this momentum remains to be seen as there are significant headwinds incoming.”

By MILLIE TURNER

Source: City AM

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UK house prices increase 10.9% from February 2021

House prices in the UK have increased 10.9% on an annual basis, with the average property in the UK being valued at £276,755, according to the latest data from the government’s house price index.

The data found that house prices in the UK have risen by 0.5% since January this year.

The UK Property Transactions Statistics showed that in February 2022, on a seasonally adjusted basis, the estimated number of transactions of residential properties with a value of £40,000 or greater was 112,240, representing a 20.8% decrease compared to February 2021.

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Between January and February 2022, UK transactions increased by 4.4% on a seasonally adjusted basis.

SPF Private Clients managing director of mortgage broker Mark Harris suggests that the “ready availability of cheap finance” is one of the contributing factors to higher house prices.

Harris comments: “Lenders remain keen to lend, with borrowers opting for longer-term fixes in order to counter the considerable uncertainty in the world.”

“While changes are being consulted on to relax some affordability criteria and allow certain buyers to borrow more, a return to irresponsible lending is unlikely given there would still be barriers in place,” he adds.

In England, house prices have on average increased by 0.9% since the start of this year, while an annual price rise of 10.7% takes the average property value to £295,888.

For London, house prices have on average gone up by 2.2% since January, while on an annual basis prices have risen by 8.1%, which has increased the average property value to £529,882.

Although London may not be seeing the fastest levels of growth compared with other parts of the country, Antony Roberts director Alex Lyle says: “London continues its upwards trend in prices, with detached family homes doing particularly well.”

“We continue to see large numbers of viewings, multiple offers and sealed bid scenarios, with buyers on our patch anxious not so much about rising house prices or interest rates but limited choice.”

Meanwhile, house prices in Wales have fallen on average by 0.7% since January 2022, however, on an annual basis, the average property value has increased by 14.2% to £205,114.

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Regional data showed that the East of England experienced the greatest increase in its average property value over the last 12 months with a movement of 12.5%.

The East Midlands saw the most significant monthly price fall with a movement of -0.4%.

London experienced the greatest monthly growth with an increase of 2.2% but saw the lowest annual price growth with an increase of 8.1%.

Henry Dannell director Geoff Garrett says: “The market has continued to excel despite what is a very delicate economic landscape and while the cost of borrowing has remained fairly favourable, those currently looking to buy should tread very cautiously with regard to over borrowing.”

“It remains to be seen as to whether the cost of a mortgage will climb substantially this year, but with the wider cost of living also putting a squeeze on household finances, those borrowing well beyond their means may fall into financial difficulty further down the line,” Garrett adds.

With soaring inflation, the ongoing cost of living crisis and higher energy bills, Quilter mortgage expert Karen Noye says “many people are feeling the squeeze financially”.

Adding into the mix, the new energy price cap and increase in national insurance, alongside an increase in moving costs, Noye suggests house prices could dip over the coming months.

She comments: “While house prices have remained robust for the time being, how the housing market truly reacts to the current circumstances is yet to be seen. However, it is unlikely that house prices will be able to continue rising at the same rate seen in recent times – particularly against the backdrop of an economy already trying to recover from the impact of the pandemic.”

“If a slowdown does begin to materialise, a gradual fall in house prices is expected as opposed to a sudden drop. At present, there remains too much demand and too little stock, so house prices will likely remain high for some time yet,” Noye concludes.

By Becky Bellamy

Source: Mortgage Finance Gazette

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Annual house price growth in England and Wales up 8.4%

Annual house price growth has increased to 8.4% in England and Wales during March, according to the latest data from e.surv’s Acadata House Price Index.

Data showed that the average price paid for a home in England and Wales increased by £4,900 to £370,052, which equates to an increase of 1.3% compared to the average price paid in February.

The increase sets a new record level for England and Wales for the fifth time in 12 months, underlining the recent strength of the market.

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Prices are 8.4%, above March 2021 levels, representing a 2.9% increase over February 2022’s revised annual rate of 5.5% for homes bought with cash or a mortgage.

The average house price in England and Wales has continued to increase throughout Q1 2022 on an almost straight-line basis.

While market commentary had predicted a slowing growth rate, house prices throughout large areas of England and Wales have continued to climb so far this year.

The percentage change in annual house prices on a regional basis in England, and for Wales, averaged over the three-month period of January to March 2022, compared to the same three months the previous year.

Seven regions saw an increase in their annual rates of growth, compared to the previous month, while three areas experienced a fall, all of which were located in the north of England.

Wales was named the area with the highest annual growth rate, a position it has held for eight consecutive months. South East dropped in second place in terms of house price growth while the South West stood in third place with Bournemouth witnessing a 19.4% price growth over the last 12 months.

During Q1 2022, e.surv’s heat map showed four distinct area in England and Wales in terms of house price growth with Wales having an annual price growth of 8.9% which is 1.2% higher than the next region of the South East.

The South East, which was grouped with the South West and Greater London, saw prices rise between 6.7% and 7.7% per annum, while the Midlands, consisting of the East and West Midlands, saw price increases between 3.7% and 4.3%.

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The North of England, consisting of the North East, the North West and Yorkshire and the Humber, saw prices rising by less than 2.5%.

Commenting on the data, e.surv director Richard Sexton says: “The strength of the market is underpinned by the continued limited supply and strong demand for space post the pandemic to meet our new expectations of how and where we live and work.”

Sexton explains: “This has been most visible for many months in the performance of Wales as a region but it is supported by the growth in the commuter belts of the South East which offer space but also proximity and good connections to urban centres for hybrid working.”

“Ultimately low interest rates continue to support buyers’ affordability. The Bank of England has alluded to rates rising slowly in the face of economic headwinds. But inflation has traditionally signalled diminishing returns in other asset groups and often heralds a re-emergence in the popularity of bricks and mortar with investors. We may therefore see even more demand for those desirable properties that are coming to market,” he adds.

By Becky Bellamy

Source: Mortgage Finance Gazette

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House prices jump in March, Halifax data shows

House prices continued to defy gravity and surged upwards in March, with Halifax’s latest house price index showing a 1.4% rise – the biggest monthly increase for six months.

Year on year house prices are now rising at 11 per cent, the highest level seen since mid 2007, shortly before the financial crash.

These latest gains helped push the average property price to a new record high of £282,753.

Halifax points out that the average property has increased in value by £28,113 in the space of a year, which is on par with the average UK earnings over the same period – at £28,860.

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Regional figures show that the South West is the region enjoying the strongest growth, with annual house price inflation of 14.6%.The average house price is now £298,162, a record for the region.

This is the first time since January 2021 that Wales has not recorded the UK’s highest annual growth, house price inflation remains extremely strong, at 14.1%.

Elsewhere, property prices in Northern Ireland also continue to be on the rise, with annual growth now at 13%, and an average price of £177,265.

The South East also saw a big increase in house prices, with annual growth now at 11.6%, and an average price of £385,790. Prices in the region have now risen by £40,177 over the last year, the first time any English region outside of London has ever posted a £40,000-plus rise over just 12 months.

London itself continued its recent upward trend, with prices now up by 5.9% year-on-year, with an average price of £534,977.

Meanwhile house prices also edged up again in Scotland – reaching a new record of £194,621. However the rate of annual growth continues to slow somewhat, falling to 8.2% from 9.3% last month.

Halifax’s data shows the effect of the coronavirus pandemic on the housing market. The average house price has risen by 18.2% in the two years since the first national lockdown.

However, the impact of the pandemic on buyer demand can be seen most clearly when looking at different property types, with a premium now put on those properties offering greater space – both indoors and out. Over this two year period, prices for flats have increased by 10.6% whereas the average detached property has increased by 21.3%.

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Halifax managing director Russell Galley says: “The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on households’ finances. Although there is some recent evidence of more homes coming onto the market, the fundamental issue remains that too many buyers are chasing too few properties.”

Galley adds that thee market conditions were creating challenges for first-time buyers and homemovers who face ever bigger leaps to move up the rungs to a larger property.

He says that the housing market though remains linked to the health of the wider economy. “Buyers are therefore dealing with the prospect of higher interest rates and a higher cost of living. With affordability metrics already extremely stretched, these factors should lead to a slowdown in house price inflation over the next year.”

Commenting on this latest data SPF Private Clients chief executive Mark says: “Halifax reports yet another uplift in property prices as demand continues to outstrip supply. Lenders are still keen to lend and have plenty of cash available to do so, enabling borrowers who may be sitting on considerable savings accrued during lockdown to stretch themselves to afford a bigger property.

“There has been wide speculation that higher fixed costs such as the hike in national insurance contributions and increase in general cost of living will impact affordability calculations when it comes to getting a mortgage. If costs are going up, it stands to reason that this will impact borrowers as there is less money available to service the mortgage.

“But for now, borrowers are taking advantage of low mortgage rates with some lenders, such as Halifax and Scottish Widows, increasing loan-to-income multiples from 4.49 to 4.75 per cent for higher earners.’

North London estate agent and former RICS residential chairman Jeremy Leaf adds: “These numbers are very strong but mostly reflect activity of the past few months.

“Since then we’ve noticed, on the ground, how rising interest rates, inflation and energy costs in particular, exacerbated by the war in Ukraine, have taken their toll.

“There is still plenty of market resilience and demand for correctly-priced houses and flats but increasingly stretched affordability is inevitably putting a break on price growth and transaction numbers.”

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown: “Your home made almost as much money as you did last year. But while homeowners might feel better off on paper, for anyone trying to get onto the ladder, or move up it, this is pushing properties even further out of reach. And right now may not be a sensible time to stretch yourself.”

Source: Mortgage Finance Gazette

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Housing market set to cool after prices rise by a fifth in five years

House prices have climbed by more than a fifth in the past five years, boosted by unprecedented buyer demand and increased household savings after the pandemic.

Asking prices rose by more than 8pc in the year to February, according to property website Zoopla, and have jumped by 21.5pc since 2017.

House price growth has been propped up by a chronic shortage of homes for sale in the past two years, with the average property in the UK now priced at £245,200.

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Homeowners have enjoyed huge price growth and unprecedented competition amongst buyers since the property market reopened after the first lockdown in the summer of 2020.

Homes which list for sale have been snapped up by desperate buyers within weeks. Almost a third more sales were agreed in the first three months of 2022 compared to pre-pandemic levels, according to Zoopla.

The company reported buyer appetite remained “unseasonably strong”, despite predictions the market would begin to cool this year.

Gráinne Gilmore, of Zoopla, said: “Demand is strongest for family houses and more than twice as high as usual for this time of the year.

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“But demand is up across nearly all property types, indicating that those thinking of moving are in pole position to sell.”

Buyers have rushed to purchase whilst they can still access historically cheap mortgage deals and before interest rates rise further. The Bank of England earlier this month made its third consecutive increase to the Bank Rate, to 0.75pc, and further rises are expected.

Despite soaring buyer demand, the supply of homes for sale in February was still 42pc lower than the five-year average. Zoopla predicted supply would build in the coming months, but warned it would not reverse the extreme demand imbalance this year.

Ms Gilmore added: “The increased economic headwinds, including the rising costs of living and increasing mortgage rates, property price growth will start to moderate as we move through the second half of 2022.”

By Rachel Mortimer

Source: Telegraph

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Property prices hit new record in March, Rightmove data shows

The average price of a property coming onto the market came to £354,564 in March, shows the latest house price index from Rightmove.

This 1.7% monthly increase, which compares to 2.3% in February, is the largest recorded for March since spring 2004.

It also means that as of this month, house prices grew 10.4% annually, the fastest growth seen for this metric since June 2014.

The index adds that all regions and counties bar London and Scotland experienced annual increases of 10% or more, which went up 6.3% and 8%, respectively.

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Rightmove director of property data Tim Bannister says that, with there being twice as many buyers as sellers in the market currently, “the imbalance between high buyer demand compared to low available property supply is the greatest that we have ever seen for the start of a spring market.”

The data also shows that 22% of property deals are being agreed on the Rightmove website within the first week of going on sale, and 47% within the first two weeks.

Bannister continues: “Many of those who are selling in this record-breaking market obviously also face the prospect of buying again in the same market, and being in fierce competition against other buyers.

“Having a buyer for your own property, subject to contract, puts those who are buying again in a powerful position compared to buyers who have yet to sell, and agents report that these ‘power buyers’ are more likely to get the property that they want and negotiate the best deal on price.”

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North London estate agent and former Rics residential chairman Jeremy Leaf comments: “Although Rightmove reports that asking prices aren’t rising quite as rapidly this month compared with last, overall the numbers are still strong, reflecting the continuing huge mismatch between supply and demand.

“In our offices, we have found stronger interest in higher value, larger family homes, where buyers seem to find it easier to shrug off concerns about rising interest rates and events in Ukraine having an even more serious impact on household expenditure than previously.

“Nevertheless, transaction numbers are down a little from the heady days of most of last year, and transaction times are lengthening.

“Flats are a different story, particularly those without outside space and good connectivity, where stretched affordability and deposit raising is more of an issue.

“As a result, flat prices will probably soften rather than correct but are certainly not going out of fashion completely now hybrid work patterns are more firmly established.”

By Gary Adams

Source: Mortgage Finance Gazette

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UK house prices surge above £350,000 as demand outstrips supply

The average house price in Britain has surged above £350,000 for the first time ever as buyer demand outstrips the amount of homes on sale.

House sellers were typically asking for £354,564 for a property in March, up £5,760 on February levels in the biggest monthly price hike since 2004, according to data from property platform Rightmove.

The average price last month was also 10.4 per cent higher than the same time last year, the sharpest annual rise that Rightmove has recorded in any month since June 2014.

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Rightmove said that house prices had been stoked by the biggest mismatch between buyer demand and supply ever recorded, with more than double the amount of buyers as sellers currently active in the market.

But the firm’s director of property data Tim Bannister said the boom may settle in the coming months as economic pressures begin to bite.

“There are headwinds that seem likely to remove the current market froth in the second half of the year,” he said.

“We’ve just seen interest rates rise again, and there are further incremental increases forecast for the year which will raise mortgage rates for some.”

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Soaring Inflation and a looming cost of living crunch were also likely to affect buyer affordability and market sentiment in the coming months, Bannister said.

So-called ‘top-of-the-ladder’ homes were currently weathering the biggest jump in prices, with four bedroom or more properties recording an average jump of £23,619 due to the high demand and greatest scarcity of supply.

Despite the sharp rise in asking prices from sellers, agents have reported having to slash initial prices as prospective buyers are left “underwhelmed” by over-optimistic sellers, Rightmove said.

By CHARLIE CONCHIE

Source: City AM

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London house prices see record stretch of growth while average UK asking price breaks £350,000 for first time

Every month for the last year, annual house price growth has climbed. This is the longest stretch of year-on-year rises since the beginning of 2017 as London enters a strong spring sellers’ market.

The annual rate of growth in asking prices has increased every month since April 2021. This means the marketed price of a London home is 6.3 per cent higher this March than 12 months ago, taking the average to £664,400. From February 2021 to February 2022, the increase was as much as 7.3 per cent, up from 4.2 per cent from January to January.

The last time the capital recorded a sustained stretch of uninterrupted growth was from September 2009 to February 2017, according to the latest Asking Prices Index from Rightmove.

The time it takes to sell a property in London also dropped from 68 days to 57 this February after a high of 71 days in the same month last year – another indicator that the London housing market is restarting after the pandemic.

During the Covid-19 crisis many young workers and families chose to move out of Britain’s cities and into smaller towns and villages which quashed sales in the capital, especially in the inner boroughs.

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However, following the vaccine roll-out programme, the reopening of culture and hospitality, the return to the office and the re-emergence of overseas buyers, activity is picking up.

How long it takes to sell a property in London

MonthNo. of days
February 202171
March 202164
April 202157
May 202157
June 202157
July 202155
August 202158
September 202157
October 202157
November 202159
December 202163
January 202268
February 202257

Although the emergency stamp duty holiday ended in the autumn, demand to move in the UK has remained at a record high as the home moving boom continued to grip the whole nation, the report also shows.

The average price of property coming to market rose 1.7 per cent this month to £354,564 – breaking through the £350,000 threshold for the first time. This is the largest monthly rise for March since 2004 with an annual increase of 10.4 per cent.

The time it takes to sell on average in the UK fell from 44 days in January to 36 in February. The number of days from offer to completion was as low as 25 days in Scotland and 30 days in the south west of England.

“This unprecedented price level is being stoked by the greatest imbalance between buyer demand and the number of properties available for sale that we have ever measured at this time of year,” says Tim Bannister, analyst at Rightmove. “This is the strongest spring sellers’ market that we have ever seen in several metrics,” he adds.

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There are now more than twice as many buyers as sellers active in the market, which is the biggest mismatch between supply and demand that the property portal has recorded in its two-decade history.

In fact, 22 per cent of properties listed on Rightmove go under offer within the first two weeks of marketing – twice as many as in the pre-pandemic market of 2019.

“Usually buyer demand pauses in February for half term and then we see a slight break ahead of the spring but this year buyer enquiries picked up back straight away,” says Patrick Rampton of Rampton Baseley in Clapham. “There is pent up demand in the London market from Brexit and the pandemic, and with rising interest rates people want to secure a mortgage deal now. We might have half the stock but we are selling everything,” he adds.

Bannister stresses that now is the right time for cautious sellers who have been waiting for the pandemic to settle down but want to move ahead of rising interest rates and inflation. Although, the Rightmove business model is based on the listing of homes for sale.

Strutt & Parker’s Kate Eales believes despite historically low stocks, spring sellers are starting to emerge.

By Anna White

Source: Evening Standard

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UK house prices continue to surge but double-digit growth could slow

UK house prices are continuing to increase as a result of the lack of new properties being listed for sale as new buyer enquiries rise, but there are emerging signs that growth could start to slow.

Property prices in Britain hit a new eight-month high in February as the housing market showed little sign of losing momentum amid a growing living cost squeeze.

The Royal Institution of Chartered Surveyors (RICS) said a net balance of +79% of its members reported a rise in house prices in February, up from +74% in January and its highest since June.

House prices continue to rise significantly, despite the phasing out of temporary stamp duty break on property purchases in the second half of 2021.

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But with household budgets being squeezed by high inflation and imminent tax rises, RICS had doubts about whether existing house price growth could continue at the existing rate.

“Huge clouds of uncertainty hang over the economic prospects as energy prices continue to surge and the Bank of England grapples with how to manage monetary policy in this challenging environment,” said Simon Rubinsohn, RICS chief economist.

“Despite all of this, there is little evidence yet that the mood music regarding the expectations for house prices or rents is shifting.”

Expectations for house price growth in the coming 12 months were strong cross all parts of the UK, the survey showed.

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Rents were expected to increase by an average 4.5% over the next 12 months. The proportion of surveyors expecting rents to rise was the highest since December 2012, RICS said.

The supply-demand imbalance is likely to keep prices high, but there are signs that growth will start to slow.

Tom Bill, head of UK residential research at Knight Frank, said: “We are presumably witnessing the final few months of double-digit house price growth before supply picks up and demand begins to fray around the edges. UK house prices have been skewed by a lack of supply in recent months but the shelves are gradually re-stocking, a process accelerated by the arrival of spring.

“Meanwhile, higher inflation and rising mortgage rates will begin to put the brakes on sky-high demand. It won’t happen overnight but I would expect the return of single-digit house price growth later this year. While the Bank of England may adopt a more risk-averse approach to raising the base rate given the geopolitical uncertainty, mortgage rates are still playing catch-up and lenders are likely to keep withdrawing their best products.”

By MARC DA SILVA

Source: Property Industry Eye

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Halifax House Price Index – house prices surge at fastest pace since 2007

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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