Property Prices: Fastest Rise in 18 Years

Halifax reveals that property prices are rising at the fastest rate in 18 years.

Demand has continued to outstrip the number of properties on the market causing UK house prices to rise at the fastest annual rate in 18 years last month. 

One of the country’s biggest mortgage lenders and part of Lloyds Banking Group, Halifax, said the market:

  • ‘Defied any expectations of a slowdown’
  • In June, prices rose year on year by 13%, the highest since late 2004
  • Prices also rose 1.8% compared with May – the biggest monthly rise since early 2007

Figures show that a typical property now costs £294,845 – another record high.

Prices are continuing to rise despite the cost-of-living crisis. They have risen every month over the past year and have climbed by 6.8% so far this year, or £18,849 in cash terms.

Russell Galley, the managing director of Halifax, said the supply-demand imbalance continues to be the reason house prices are rising so sharply: 

Demand is still strong – though activity levels have slowed to be in line with pre-Covid averages – while the stock of available properties for sale remains extremely low.

Galley noted that property prices have ‘been largely insulated from the cost-of-living squeeze’. This is likely due to the fact that the squeeze is being felt by those on lower incomes, who are typically less likely to be buying and selling homes. On the other hand, higher earners were possibly able to save more during the pandemic, leading them to invest in property now.

He said the housing market would not remain ‘immune from the economic slowdown’, but for now it was being supported by a ‘huge shift’ in demand towards bigger properties.

The average prices for detached houses have risen by almost twice the rate of flats over the past year (13.9% versus 7.6%).

Galley added that ‘In time, though, increased pressure on household budgets from inflation and higher interest rates should weigh more heavily on the housing market, given the impact this has on affordability.’ 

He said the house price-to-income ratio had reached a record level. So a slowing of house price growth should still be expected in the months ahead, though later than previously anticipated.

Two senior officials from the Bank of England said the central bank would ‘do whatever is necessary’ to prevent the rocketing cost-of-living from becoming a lasting inflation problem. This hints at further, and possibly bigger, rate hikes. 

The Bank has raised interest rates five times since December to 1.25%.

  • Northern Ireland continues to post the strongest annual growth in house prices, up by 15.2% to an average property price of £187,833, Halifax said
  • Wales is close behind with 14.3% annual growth to an average price of £219,281
  • A Scottish home now costs an average of £201,549, breaking through £200,000 for the first time in history, and up 9.9% on June last year
  • London continues to lag behind other regions with annual price gains of 7.1%, though with an average property price of £547,031 it remains by far the most expensive place in the UK to buy a home

If you are thinking of buying, either as a first-time-buyer or to get a buy-to-let mortgage, our expert mortgage professionals are on hand to give you advice. With house prices continuing to rise, our free advice is essential for anyone making that first step, or even looking to remortgage, so be sure to book a call today.

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