Largest Rise in Six Months for UK House Prices | moneyfacts.co.uk

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Michael Brown

Content Writer
Published: 07/04/2022

The average house price rose for the ninth consecutive month as prices reach yet another record high.

Monthly house prices grew at a rate of 1.4%, the biggest rise in sixth months, according to the Halifax House Price Index for March 2022.

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

“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,” he continued.

This means the average house price for a UK home is now £282,753, which is 11% more than that recorded one year ago.

“The new record price of £282,753 is up some £28,113 on a year ago, not far off average UK earnings over the same period,” said Galley.

Compared to pre-pandemic levels, average house price has risen by 18.2%, or £43,577, since the first lockdown was announced in 2020.  

Have mortgage rates increased too?

While house prices have been on an upwards trend since the first lockdown was announced, some average fixed-term mortgage rates have continued on a similar trajectory.

According to Moneyfacts data, average two- and five-year fixed rates at a loan-to-value ratio of 75% have surpassed their recorded marks in March 2020.

Last month, average two-year fixes at a loan-to-value ratio of 75% were recorded at 2.52%, just 0.23% more than that recorded in March 2020. Five-year fixes on the same conditions stood at 2.74% last month, 0.18% more than the benchmark in March 2020.

Both rates have increased again as of today.

However, average rates suggest a different story for first-time buyers.

While two-year and five-year fixes at a loan-to-value ratio of 95% are yet to reach their pre-pandemic levels in March 2020, they have been steadily increasing since the beginning of the year.

Property rates across the country

Average house prices in the South West, which rose 14.6% across the year, saw the biggest annualised jump compared to other regions in the UK.

This is the first time since January 2021 that Wales has not recorded the strongest annual house price growth, despite the country recording a 14.1% annualised growth rate.

As for the other countries in the UK, annualised growth rates stood at 8.2% and 13% in Scotland and Northern Ireland respectively.

In contrast, Greater London recorded the slowest annualised rise at 5.9%.

Is the end in sight to price rises?

Due to the rising cost of living, recent National Insurance hikes, and an increase in the energy price cap, house prices are likely to slow later this year, according to Charlotte Nixon, Mortgage Expert at Quilter.

“Given the increased financial instability, first-time buyers and prospective homemovers will likely think twice before embarking on the expensive process of buying a new home,” she said.

However, others believe that these factors will have little impact on slowing down the rising house price rise.

“Fears around the increasing cost of living and a number of interest rate increases are yet to make a dent and so the outlook for the year ahead is a positive one where market values are concerned,” said James Forrester, Managing Director of Barrows and Forrester.

Instead, he said buyer demand remains strong, and with limited supply, there is “no end in sight”.

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