Home prices rose 12.8 percent in the year through May, up from 11.9 percent in April, marking the seventh consecutive month of increases, according to the National Bureau of Statistics’ real estate price index.
The slight increase means the typical house price in Britain was £283,000 in May, or £32,000 more than at the same time last year.
Wales has seen the highest rate of house price growth, with prices rising 14.4 per cent over the year.
On the Rise: Home prices have continued to rise for seven consecutive months despite rising inflation and interest rates weighing on the market
An extension of the tax holiday in England, Wales and Northern Ireland until June 2021 is likely to drive up prices in the previous months as buyers rushed to pay for their purchases before the end of the tax break.
Northern Ireland remains the cheapest country to buy a home with an average price of £165,000.
However, the cheapest homes anywhere in the UK are in the North West where the average price is currently £154,000.
The South West saw prices rise by 16.9 per cent through May 2022, up from 14.7 per cent in April, the largest increase anywhere in Britain.
This compares starkly to London’s 8.2 per cent rise in prices – the lowest rate of growth nationwide, although from a much higher price point.
Nick Lemming, Chairman of Jackson-Stops, said: “While prices are still hitting new highs despite the increasingly difficult backdrop for buyers, the subsequent summer months will provide a real temperature check for the market.
Our own data indicates an ever-crowded market that saw an increase in real estate listings and exchanges in July.
Broader economic factors such as inflation and higher interest rates will naturally start to weigh on the lower end of the market as the year progresses.
“But for now, it is playing into the hands of sellers who continue to benefit from the buying buzz, as movers look to secure competitive mortgage rates before further announcements from the BoE.”
Supply-side issues: Porperty experts blame the housing shortage for the continued rise in home prices despite economic conditions.
Mark Harris, CEO of mortgage brokerage SPF Private Clients, warns of the potential impact of the 9.4 per cent inflation rate, and the potential for further interest rate increases, on the market.
Mortgage rates remain competitive even though they are on the rise. Borrowers need to move quickly to secure the best fixed rates because they are often withdrawn on short notice.
“With service levels varying widely between lenders, it may take longer than borrowers expect, particularly if their case is complex, so advice is more important than ever.”
Average mortgage rates jumped this month by 0.5 percentage point, as interest on home loans reached highs not seen since mid-2010.
House prices in the South West of England grew the fastest of any UK region rising by 16.9% in the year to May 2022.
“More crazy house price growth in May, but things have eased up since then,” said Ross Boyd, founder of perennial mortgage comparison platform Dashly.com.
Mortgage rates have risen by a knot, and more rate increases are almost certainly on the cards as the Bank of England tries to keep inflation, now at 9.4 per cent, under control.
“It is unreasonable to think that the housing market will remain unaffected by the current interest rate cycle, which is now firmly on an upward trajectory.
The real estate market will calm down throughout 2022 and 2023. When it comes to remortgages, it will not be a price shock to a lot of borrowers but a price shock. The pending remortgage crisis will add significantly to the cost of living crisis.
Jeremy Leaf, North London estate agent and former RICS Chairman, added: ‘As we found at the sharp end, prices continue their upward trajectory, despite the impact of 40-year high inflation and five successive rate hikes.
However, the continued lack of choice, coupled with the desire to take advantage of mortgage offers at extremely low rates before they expire, has given the market an additional boost.
Others point to a lack of housing stock as driving prices higher despite economic pressures meaning that we are unlikely to see a price correction as the market remains in the hands of potential sellers.
Stuart Law, CEO of Assetz Group, commented: ‘Higher interest rates and higher levels of inflation are starting to have some effect in easing excess housing demand against supply, but nowhere near enough of an effect yet to cause a shift in the balance, which is Which will lead to lower prices.
However, while demand remains high and prices continue to increase, supply is at alarmingly low levels.
All of these factors combined have the potential to create a perfect storm as the market heats up and many potential buyers fall out of, or are unable to climb, the housing ladder.
To solve this problem and take the heat out of the market, we need sustainable growth in supply over the long term.
Best mortgage rates and how to find them
Mortgage rates skyrocketed as the Bank of England’s base rate rose rapidly.
If you are looking to buy your first home, move or remortgage, or are a buy-to-let owner, it is important to get good mortgage advice from a broker who can help you find the best deal.
To help our readers find the best mortgage, This is Money has partnered with an independent, no-fee L&C broker.
The Mortgage Calculator backed by L&C allows you to filter deals to see which ones fit your home value and deposit level.
You can also compare different durations of mortgage rates, from two-year fixes, to five-year fixes and ten-year fixes, displaying monthly and total costs.
Use the tool at the link below to compare the best deals, factoring in fees and prices. You can also start an online application on your own time and save it as you move forward.
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