New monthly figures from leading lender the Halifax reveal that UK house prices are continuing to rise, long after the end of the stamp duty holiday. However, the bank believes the squeeze on incomes will begin to have an effect this year.
According to the Halifax monthly index, average prices were up by 1.4% in March, compared to February’s figure, and 11% higher than a year ago. This is the largest annual increase since 2007 – before the financial crisis. Average house prices have risen by £43,577 since the start of the pandemic, with increases still being driven by an imbalance between supply and demand.
Russell Galley, Halifax’s managing director, said:
“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.”
The desire for more space, both inside and out, is also pushing up the cost of larger homes, with the average price of a detached property having risen by more than 21% over two years.
Buying and selling at the same time?
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The squeeze on household income from higher energy bills and rising food prices is likely to have an impact in the coming months, the bank said. In addition, inflation is currently at more than 6% with the Bank of England warning that it could reach 10% this year. This is likely to translate into higher interest rates – the base rate has already risen to 0.75% in March.
According to Russell Galley:
“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.”
Read more about this story in The Guardian and the Evening Standard.
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