House prices up £32k in a year says ONS

House prices climbed 12.8 per cent in the year to May, up from 11.9 per cent in April, marking the seventh consecutive month of increases, according to the ONS property price index. 

The uptick means the typical home price in Britain was £283,000 in May, or £32,000 more than the same time last year. 

Wales saw the highest rate of house price growth, with prices up 14.4 per cent over the year.

On the rise: House prices have continued to climb for seven consecutive months despite rising inflation and interest rate putting pressure on the market

The extension of the tax duty holiday in England, Wales and Northern Ireland until June 2021 is likely to have pushed up prices in the preceding months as buyers rushed to push their purchases through before the end of the tax break.

Northern Ireland remains the cheapest country to buy a house with an average price of £165,000. 

However, the cheapest homes anywhere in the UK are in the North West where the average price currently sits at £154,000.

The South West saw prices climb 16.9 per cent to May 2022, up from 14.7 per cent in April, the biggest increase anywhere in Britain. 

This is in stark comparison to London price rises of 8.2 per cent – the lowest growth rate nationally, although from a much higher price point. 

Nick Leeming, chairman of Jackson-Stops, said: ‘While prices are still reaching new heights despite an increasingly challenging backdrop for buyers, the later summer months will provide the real temperature check for the market.

‘Our own data indicates a continually busy market that has seen both property listings and exchanges increase in July. 

‘Wider economic factors such as inflation and rising interest rates will naturally begin to squeeze 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 lock in competitive mortgage rates ahead of further announcements from the Bank of England.’

Supply-side issues: Porperty experts are blaming the lack of housing stock for the continuing rise in house prices despite the economic conditions.

Supply-side issues: Porperty experts are blaming the lack of housing stock for the continuing rise in house prices despite the economic conditions. 

Mark Harris, chief executive of mortgage broker SPF Private Clients, warns of the impact the 9.4 per cent inflation rate, and potential further interest rate hikes may have on the market. 

‘Mortgage rates remain competitive although they are on the rise. Borrowers need to move quickly to secure the best fixed rates as they are often pulled at short notice. 

‘With service levels varying considerably between lenders, it may take longer than borrowers anticipate, particularly if their case is complex so advice is more important than ever.’

This month average mortgage rates have leapt by 0.5 percentage points, with interest on home loans hitting highs not seen since the mid-2010s.

House prices int he South West of England grew the fastest of any area in the UK rising 16.9% in the year to May 2022.

House prices int he South West of England grew the fastest of any area in the UK rising 16.9% in the year to May 2022.

Ross Boyd, founder of the always-on mortgage comparison platform, said: ‘More mad house price growth in May but things have taken a nosedive since. 

‘Mortgage rates have been rising at a rate of knots, and more rate rises are almost certainly on the cards as the Bank of England attempts to control inflation, which is now at 9.4 per cent. 

‘It’s inconceivable to think the housing market will remain unaffected by the current interest rate cycle, which is now firmly on an upwards trajectory. 

‘The property market will cool throughout 2022 and in 2023. When they come to remortgage, it will be less a case of rate shock for many borrowers but rate trauma. The pending remortgage crunch will significantly add to the cost of living crisis.’

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: ‘As we are finding at the sharp end, prices are continuing their upward path, despite the impact of 40-year high inflation and five successive interest rate rises.

‘However, the continuing lack of choice, combined with a desire to take advantage of mortgage offers at super-low rates before they expire, have given the market added impetus.’ 

Others point to the lack of housing stock as driving the rise in prices despite the economic pressures meaning that we are unlikely to see a price correction as the market is still in the hands of would-be sellers.

Stuart Law, chief executive of Assetz Group, commented: ‘Rising interest rates and high inflation levels are beginning to have some impact on moderating the excess demand for housing versus supply, but not anywhere near enough impact yet to tip the balance, which would lead to falling prices.

‘However, whilst demand is still high and prices continue to increase, supply is at worryingly low levels. 

‘All these factors combined have the potential to create a perfect storm where the market overheats and many potential buyers are priced out of joining the housing ladder, or are unable to move up it. 

‘To solve this issue and take heat out of the market, we need sustained growth in supply over the long term.’

Best mortgage rates and how to find them

Mortgage rates have risen substantially as the Bank of England’s base rate has climbed rapidly.

If you are looking to buy your first home, move or remortgage, it’s important to get good independent 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 independent fee-free broker L&C.

Our mortgage calculator powered by L&C can let you filter deals to see which ones suit your home’s value and level of deposit.

You can also compare different mortgage fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes, with monthly and total costs shown.

Use the tool at the link below to compare the best deals, factoring in both fees and rates. You can also start an application online in your own time and save it as you go along.

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