UK house prices rose again in April, extending the longest streak of monthly increases in six years, according to Halifax, but the lender said rising interest rates and squeezing Household budgets would cool the market over the next year.
The average cost of a house rose 1.1% in April, the 10th consecutive monthly rise over the longest period since 2016, to a record £286,079.
The price of the average property has increased by 10.8% compared to the same month last year, with owners benefiting from an increase of almost £50,000 in the price of their property over the past two years.
Halifax said the pandemic-fueled housing boom, marked by buyers in a ‘race for space’ as city dwellers sought more rural properties when flexible and remote working took hold, will continue for the moment.
“For now, at least, despite the current economic uncertainty, the sharp increases we’ve seen in house prices show little sign of slowing down,” Halifax chief executive Russell Galley said.
“Housing transactions and mortgage approvals remain above pre-pandemic levels, and continued growth in new buyer demand suggests that activity will remain heightened in the near term. The imbalance between supply and demand persists, with an insufficient number of new properties coming on the market to meet the needs of potential buyers and stiff competition to secure properties driving up prices.
However, the rate of growth is slowing, with April down from March’s 1.4% increase and 11.1% annual rate in the same month, according to the monthly property index for Halifax.
The Bank of England on Thursday raised interest rates from 0.75% to 1% to combat rising inflation, which is expected to top 10% this year, the highest level since 1982, as household energy bills are expected to rise further in October.
“The headwinds facing the broader economy cannot be ignored,” Galley said. “With interest rates rising and inflation further squeezing household budgets, it remains likely that the rate of house price growth will slow by the end of this year.”
Halifax said housing demand was focused on larger family homes rather than smaller properties such as flats, with the price of detached and semi-detached properties rising 12% a year, compared to 7.1% for flats.
Northern Ireland has overtaken the South West of England as the UK’s top performer in rising house prices, up 14.9% year-on-year to £182,565 . The average property in the South West rose by 14.8% to an average of £301,632.
Wales rose 14.2% to an all-time high of £214,396, while Scotland’s slower growth rate of 8.3% fueled yet another record average of £196,471.
Greater London continues to show the lowest growth rate at 6.2%. However, he also has the most expensive homes in the UK, averaging £537,896.