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House price growth steady as cost of living bites – Halifax

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  • 07/02/2022
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House price growth steady as cost of living bites – Halifax
House price inflation in January fell to its lowest level in seven months, as the cost of living soared to its highest in nearly 30 years.

 

The average home value edged up by 0.3 per cent last month to reach a record £276,759, as measured by lender Halifax.

It is the smallest monthly increase since June 2021, although annual growth remained steady at 9.7 per cent.

The slowdown coincides with inflation rocketing to 5.4 per cent at the start of the year.

Experts said the increasing cost of living and higher interest rates could put more pressure on house prices in the coming months.

Russell Galley, managing director at Halifax, said: “Despite record levels of first-time buyers stepping onto the ladder last year, younger generations still face significant barriers to home ownership as deposit requirements remain challenging.

“This situation is expected to become more acute in the short-term as household budgets face even greater pressure from an increase in the cost of living, and rises in interest rates begin to feed through to mortgage rates.

“While the limited supply of new housing stock to the market will continue to provide some support to house prices, it remains likely that the rate of house price growth will slow considerably over the next year.”

Karen Noye, mortgage expert at wealth management firm, Quilter added: “While forecasts of a housing price reduction have not yet fully materialised it seems inevitable that there will be some sort of slowdown in the coming year.

“With energy prices soaring, inflation running riot and interest rates likely to rise in the very near future, people are going to start to feel less financially stable than they were before, and this will translate into fewer property purchases.

“House price growth continues to far outstrip wage growth and now with a cost-of-living crisis looming, the run of ever-increasing property prices is simply unsustainable.”

However, low housing supply is expected to temper the effects of inflation and higher rates.

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