House prices in Britain rose 13 per cent in the year to June, raising the average house price to £294,845.
It is the highest annual growth rate since 2004, according to the most recent Halifax House Price Index.
Prices rose 1.8 percent in June alone, up from 1 percent in May, making it the 12th consecutive month of price inflation.
Northern Ireland saw the strongest house price growth in June with the median house rising 15.2% to £187,833.
Overall house prices are up 6.8 per cent or £18,849 in cash so far in 2022.
However, experts say there are signs that growth may start to slow as economic turmoil begins to affect the real estate market.
Russell Galle, managing director in Halifax, said: “The imbalance between supply and demand continues to drive house prices so sharply.
Demand remains strong – although activity levels have slowed to align with pre-Covid averages – while the stock of properties available for sale remains very low.
Of course, the housing market will not remain immune from the difficult economic environment.
“But for the time being it continues to show – as it has over the past two years – a unique set of factors influencing prices.”
One such factor continues to be the massive shift in demand towards larger properties, with average detached house prices rising at about twice the rate of apartments over the past year (13.9 per cent vs 7.6 per cent).
Galle added that over time inflationary pressures and higher interest rates will affect the housing market and we can expect a slowdown in house price growth in the coming months.
Still rising: house prices up 6.8% or £18,849 in cash so far in 2022 after 12 months of consecutive growth
The growing cost of living crisis will also affect home price growth, said Karen Noe, a mortgage expert at Quilter.
“With inflation expected to reach double digits within months, the cost of living rising rapidly and more interest rate increases expected, people are being forced to tighten their financial constraints,” she said.
If demand falls as expected, home prices could drop over the coming months and we could see a price reversal in the fall when the true scale of the energy crisis emerges as temperatures drop.
“While the housing market has so far defied the odds in the face of challenges posed in recent years, the cost of living crisis will undoubtedly be its biggest battle yet.”
Northern Ireland is experiencing the largest growth
Regionally, Northern Ireland continues to see the largest growth rate with house prices in the region rising by 15.2 per cent, with the average property price now being £187,833.
Wales also continues to register a strong annual growth rate, up by 14.3 per cent, with an average property price of £219,281.
Scotland also saw an increase in the annual rate of house price inflation, up to 9.9 per cent. The average Scottish house price is now £201,549, topping £200,000 for the first time.
London still lags behind other regions in terms of annual house price inflation, which currently stands at 7.1 per cent. However, property prices in the capital still far outpace other areas with an average property price of £547,031.
The number of UK home sales rose in May, according to separate property transaction data from HMRC.
Over the month, 109,210 transactions took place — up 1.3 percent from April’s figure of 107,780, on a seasonally adjusted basis.
However, transactions fell year on year. In May 2022, the number was 5.1 percent lower than it was 12 months earlier.
The latest figures from the Bank of England show that the number of mortgages approved to finance home purchases rose in May 2022, by 0.1 percent to 66,163. On a yearly basis, the May number was 23.4 percent lower than May 2021.
The number of UK home sales rose in May, according to data from HMRC
However, eventually rising mortgage rates can also dampen the housing market.
Peter Beaumont, chief executive at The Mortgage Lender, added: “The race for reform is good and real for borrowers, as the Bank of England earlier this week gave signals that interest rates could rise higher next year to combat surging inflation.
“With price growth still strong, the balance of power in the market remains firmly with the seller. Lenders continue to be keen to lend to suitable applicants. Individuals looking to move up the ladder or remortgage who may have more complex circumstances such as a quick profile of their credit score should Consider looking beyond traditional lenders to alternative and specialized options.
Constant price hikes are also affecting first time buyers. Many of them pay stamp duty on their homes, with 26 per cent indicating they would pay more than £300,000 to get on the ladder.
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.
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