Average property prices increased by another 0.5 percent last month which equates to a whopping £1,478. Despite a slower start to the year, this is the eighth successive month house prices have continued to increase. According to Halifax, year-on-year house prices grew by 10.8 percent which is the fastest rate of annual growth since June 2007.
Property prices have increased by an eye-watering £38,709 (16 percent) since the coronavirus pandemic began in February 2020.
In the last year alone, house prices have increased, on average, by £27,215 – the largest one-year cash rise recorded in over 39 years of index history.
However, demand for homes is still outstripping supply which is boosting house prices.
Russell Galley, Managing Director, Halifax, said this could be a “particular issue” for buyers looking for larger homes like detached properties.
He added: “Over the past year the average price of detached properties (£43,251, 11 percent) have risen at a rate more than four times that of flats (£10,462, seven percent) in cash terms.”
Buying agent Simon English, of Simon English Property Search, agreed claiming that demand for family homes across the home counties remained strong last month.
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Mr English said areas of southwest Surrey, Hampshire and West Sussex have seen “particularly high” volumes of enquiries.
This has led to a flurry of “competitive bidding” among buyers.
He continued: “This has often resulted in a best and final offer scenario with agreed prices achieving more than 10 percent above the asking price.
“Following last year’s unprecedented rush of London families securing larger properties across the home counties, the regional housing markets are now seeing up to 50 percent fewer homes for sale.
“With demand still outstripping supply, vendors wanting to sell this year should consider selling their home sooner rather than later in order to achieve their target asking price.”
Despite rising prices, an increase in the cost of living is likely to have an impact on the property market.
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Mr Galley said geopolitical events, like the war in Ukraine, are likely to have an impact on confidence.
The property expert continued: “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 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.”
Regional house prices
Wales continues to be the strongest performing region with annual house price growth of 13.8 percent.
The average property price in Wales has risen to £207,184.
The southwest is also continuing to see growth with annual house price inflation now up to 13.4 percent.
The average property price in the southwest is £293,968.
The popularity of these two regions could be attributed to the lifestyle they offer buyers.
Both areas offer more rural, scenic areas which has been more popular among buyers since the pandemic began.
London has continued to be the weakest performing area in the UK.
However, annual house price growth is continuing to slowly rise, reaching its strongest level since the end of 2020 at 5.4 percent.
Guy Gittins, CEO of Chestertons, said the capital is experiencing a “substantial uplift” in demand, even compared to the record numbers seen last year.
He continued: “Although the suburbs remain a popular choice, the volume of buyer enquiries for areas such as Richmond or Kew has remained at last year’s levels.
“If 2021 was defined by a race for space and people moving out to the suburbs, 2022 is seeing an absolute boomerang effect with house hunters rushing back into the capital; a change in buyer behaviour that has been accelerated by the return of office workers and international travellers.”
Jason Tebb, Chief Executive Officer of property search website OnTheMarket.com said buyer and seller sentiment “shows no signs of slowing down”.
He continued: “Double-digit price growth across many areas of the country underlines the strength of the market, which is far from limited to price hikes in the capital or the south-east.
“More stock is coming to market as you would expect as we head towards spring but it’s not keeping pace with pent-up demand.
“Decisions need to be made quickly, or buyers face missing out.
“As values continue to rise, sellers may be tempted to hold fire in order to achieve the maximum price for their homes but with many of them also moving up the ladder, the trading gap is widening all the time.
“If we see double-digit growth again this year, there’s a risk of being priced out of that upgrade, as affordability is stretched further still.”