UK house prices rising at fastest rate in 15 years, says Halifax
UK house prices continue to defy economic logic.
According to Halifax, UK house prices are rising at their fastest rate since 2007, with the specific property posting its most significant annual cash gain in the nearly 40 years since the lenders’ index began.
Two years into the coronavirus pandemic, commentators say the housing market continues to defy economic conditions, with property prices averaging another 0.5% rise in February, equaling £ 370 per week.
It was the eighth consecutive month that property values rose, taking the annual price growth rate to 10.8%, the highest figure since June 2007.
The typical house prices have increased by more than £38,000 since February 2020, with £27,200 added to the value in the last 12 months.
“This is the largest single-year cash increase in the index’s more than 39-year history,” a Halifax spokesman said. This meant that the median house price had hit “another new record” of £278,123.
The contraction in household finances, fueled by rising interest rates and inflation, doesn’t appear to have done much to dampen market momentum.
Property agents and others have said a shortage of homes for sale continues to drive up prices. In contrast, the pandemic has prompted many people living in urban areas to seek relocation somewhere with more open space, like a town or small town city in the countryside or by the sea.
However, events in Ukraine are expected to help slow the market.
Managing director of Halifax, Russell Galley, said: “The war in Ukraine is a human tragedy, but it is also likely to affect trust, trade and global supply chains.”
He said high oil and gas prices were an immediate consequence, meaning UK inflation, already at a 30-year peak, would stay higher for longer, adding to the pressure on already stretched family income. Meanwhile, further increases in short-term interest rates seemed likely.
“These factors are likely to weigh on buyer demand as the year progresses, with market activity likely to return to normal levels and home price growth expected to slow,” Galley said.
Wales was the strongest performing nation or region in house price growth, with a typical increase of 13.8% over the past year, while the South West of England followed closely with 13, 4 %. By contrast, the figure for London was 5.4%.
Lewis Shaw, who founded mortgage broker Shaw Financial Services, said the UK property market had “fallen down the rabbit hole”, adding: “Economic logic suggests prices should be going down, but the surreal lack of inventories keeps values afloat.”
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