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 tight household budgets would cool the market. during the next year.
The median cost of a home rose 1.1% in April, the tenth consecutive monthly increase since 2016, to an all-time high of £286,079.
The average property price increased by 10.8% on the same month last year, with homeowners enjoying almost £50,000 increase in the price of their property in the last two years.
Halifax said the pandemic-fueled housing boom, marked by buyers in a “race for space” as urban dwellers sought out more rural properties as flexible and remote working took hold, will continue for now.
“For now at least, despite the current economic uncertainty, the strong increases we’ve seen in house prices show little sign of abating,” said Russell Galley, Halifax’s CEO.
“Housing transactions and mortgage approvals remain above pre-pandemic levels, and continued growth in new buyer inquiries suggests activity will continue to be higher in the near term. The imbalance between supply and demand persists, with an insufficient number of new properties entering the market to meet the needs of prospective buyers and strong competition to secure properties driving prices up.”
However, the rate of growth is slowing, with April down from the 1.4% increase in March and the 11.1% annual rate in the same month, according to the Halifax Monthly Real Estate Index.
On Thursday, the Bank of England raised interest rates from 0.75% to 1% to tackle rising inflation, which is expected to exceed 10% this year, the highest level since 1982, as it was expect home energy bills to rise again in October.
“You can’t ignore the headwinds facing the broader economy,” Galley said. “With rising interest rates and inflation putting further pressure on household budgets, the rate of growth in home prices is likely to slow by the end of this year.”
Halifax said housing demand is focused on larger family homes rather than smaller properties like flats, with the price of single-family and semi-detached properties rising 12% annually, compared to 7.1% for apartments.
Northern Ireland has overtaken the South West of England as the best UK country in terms of house price rises, rising 14.9% year-on-year to £182,565. The average property in the South West increased by 14.8% to an average of £301,632.
Wales rose 14.2% to £214,396, an all-time high, while Scotland’s slower growth rate of 8.3% still fueled a new record average of £196,471.
Greater London continues to show the slowest growth rate at 6.2%. However, it also has the most expensive houses in the UK with an average of £537,896.