House prices: Halifax says they’ve grown £28k in a year

House prices: Halifax says they've grown £28k in a year 2
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Average house prices in the UK have hit another record high, despite an interest rate rise and Britons facing a mounting cost of living crisis.

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Monthly house prices grew 1.4 per cent in March – the biggest increase in six months – pushing the average UK house price up to a record high of £282,753.

It means house prices have grown a staggering £43,577 since the start of the pandemic, according to the Halifax House Price index.  

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Regionally, the South West of England saw the biggest annual rise – of 14.6 per cent compared to March 2021. It means the region, which saw a boom in property sales during the pandemic as people flooded out of cities during lockdown, has overtaken Wales as the UK’s strongest performer in terms of annual price house inflation.

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

Prices in the capital had risen at a slower rate since the first Covid lockdown as people looked to invest in countryside properties due to more flexible working and work from home.

March’s property price rise comes despite the Bank of England raising interest rates from 0.5 per cent to 0.75 per cent last month.

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The Bank raised interest rates for the first time in December, from 0.1 per cent to 0.25 per cent and increased them further, to 0.5 per cent in February. 

However, despite average property prices rising in March, experts believe the rate of growth will slow this year, as the cost of living crisis bites.

Average Britons face an extra £800-a-year in living costs from this month, with a rise in gas bills and National Insurance, along with an increase in council tax and inflation at more than 6 per cent. 

Russell Galley, Managing Director, Halifax, said: ‘The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on households’ finances. 

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‘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.  

Monthly house prices grew 1.4 per cent in March - the biggest increase in six months - pushing the average UK house price up to a record high of £282,753

Monthly house prices grew 1.4 per cent in March – the biggest increase in six months – pushing the average UK house price up to a record high of £282,753

It means house prices have grown a staggering £43,577 since the start of the pandemic, according to the Halifax House Price index

It means house prices have grown a staggering £43,577 since the start of the pandemic, according to the Halifax House Price index

Regionally, the South West of England saw the biggest annual rise - of 14.6 per cent compared to March 2021. It means the region, which saw a boom in property sales during the pandemic as people flooded out of cities during lockdown, has overtaken Wales as the UK’s strongest performer in terms of annual price house inflation. Pictured: Library image of for sale signs

Regionally, the South West of England saw the biggest annual rise – of 14.6 per cent compared to March 2021. It means the region, which saw a boom in property sales during the pandemic as people flooded out of cities during lockdown, has overtaken Wales as the UK’s strongest performer in terms of annual price house inflation. Pictured: Library image of for sale signs

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Despite average property prices rising in March, experts believe the rate of growth will slow this year, as the cost of living crisis bites. Average Britons face an extra £800-a-year in living costs from this month, with a rise in gas bills and National Insurance, along with an increase in council tax and inflation at more than 6 per cent.

Despite average property prices rising in March, experts believe the rate of growth will slow this year, as the cost of living crisis bites. Average Britons face an extra £800-a-year in living costs from this month, with a rise in gas bills and National Insurance, along with an increase in council tax and inflation at more than 6 per cent. 

‘The effect on house prices makes it increasingly difficult for first-time buyers looking to make their first step onto the ladder, but also challenges homemovers who face ever bigger leaps to move up the rungs to a larger property.

‘However, in the long-term we know the performance of the housing market remains inextricably linked to the health of the wider economy. 

‘There is no doubt that households face a significant squeeze on real earnings. Buyers are therefore dealing with the prospect of higher interest rates and a higher cost of living.

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‘With affordability metrics already extremely stretched, these factors should lead to a slowdown in house price inflation over the next year.’

It comes as the Consumer price inflation hit a 30-year high of 6.2 per cent in February and the Government’s budget watchdog two weeks ago forecast it would go close to 9 per cent in late 2022, contributing to the biggest fall in living standards since at least the 1950s. 

Many buyers are still demanding more indoor and outdoor space, and the annual jump in flat prices is lower than for detached homes. 

Prices for flats have increased by 10.6 per cent, or £15,404, over the last two years, while the average price of a detached property has leapt by 21.3 per cent, or £77,717, over the same period, Halifax said.

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Regional shifts

South West has overtaken Wales as the UK’s strongest performer in terms of annual price house inflation, now up to 14.6 per cent, its highest rate of annual increase since September 2004. 

The average house price for properties in the South West is now £298,162, representing a record for the region.

While this is the first time since January 2021 that Wales has not recorded the UK’s highest annual growth, house price inflation remains strong, at 14.1 per cent.

The average house price is £211,942 which is yet another all-time high for the country.

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Variations: Property prices in the South West have surged by 14.6% in the past year

Variations: Property prices in the South West have surged by 14.6% in the past year

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

Though house prices also edged up once more in Scotland – reaching a new record of £194,621 – the rate of annual growth continues to slow somewhat, falling to 8.2 per cent from 9.3 per cent last month.

Elsewhere, the South East also recorded a big jump, with house price growth at 11.6 per cent and an average price of £385,790. 

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

Supply and demand is pushing up prices

There is growing debate among experts about how the coming year will pan out for the property market. 

Some think low listings and strong buyer demand will continue to push up prices, while others think the pace of property price growth could slow amid the soaring cost of living. 

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Jeremy Leaf, a north London estate agent and a former RICS residential chairman, says: ‘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.’

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘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. 

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‘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.’ 

Gareth Lewis, commercial director of property lender MT Finance, said: ‘Yet again the gap between supply and demand is pushing up prices. 

‘With the cost of living also rising, this is creating more issues in property chains with buyers having to find more money to purchase a property. 

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‘Those who are trying to move up the ladder are finding it harder still as the trading gap grows wider; while their home has gone up in value, so has the one they are trying to buy so it will cost considerably more.

‘First-time buyers are being squeezed left, right and centre, needing more money for a bigger deposit while the cost of living is also going up exponentially. It becomes a vicious circle which should inevitably stem the flow of property transactions.

‘Something needs to be done to stimulate the market so that more people are able to buy, with the lack of housing being built in the first place an issue in urgent need of addressing.’ 

House prices: Halifax says they've grown £28k in a year 3

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