According to Halifax’s house price index, this is a slight fall in annual growth from 11.1 per cent in the same period last year, but the report said that this partly reflected the strength of the market a year ago.
Monthly house prices have increased by 1.1 per cent in April, which is the 10th consecutive monthly rise. The report noted that this was the longest run of monthly increases since 2016.
It added that prices for detached and semi-detached properties have risen by 12 per cent over the last year, which compared to around 7.1 per cent annual growth in flats.
Northern Ireland reported the strongest annual house price growth at 14.9 per cent, with average house prices pegged at £182,565.
Wales also had a healthy yearly growth at 14.2 per cent, with average house prices coming to an all-time high of £214,396.
Scotland’s house prices reached a record of £196,471, with annual growth coming in at 8.3 per cent.
The report said that six out of nine regions in England recorded double digit growth, with South West bringing in the largest year-on-year increase of 14.8 per cent. Average house prices are £301,632.
London lagged behind other regions at 6.2 per cent annual average house price growth and average prices coming to £537,896.
The report continued that average houses prices have risen by £47,568 over the last two years. It took between October 2014 and April 2020 to make that same increase.
It added that average monthly gain of 0.9 per cent over the past year is more than double the typical monthly increase seen in the past decade.
The report said that whilst this raised the possibility of house prices breaching £300,000 this was “unlikely” due to predicted economic conditions.
Russell Galley, managing director at Halifax, said that housing transactions and mortgage approvals were above pre-pandemic levels and there was growth in new buyer enquiries, which suggested activity would be “heightened in the short-term”.
He added that supply and demand imbalance remained, with fewer new properties coming on to the market and competition driving up prices.
“For now, at least, despite the current economic uncertainty, the strong increases we’ve seen in house prices show little sign of abating. Demand in the housing market remains firm and mortgage servicing costs are relatively stable with fixed-rate deals making up around 80 per cent of mortgages on homes across the industry, protecting many households from the effects of rate rises so far,” Galley said.
“However, the headwinds facing the wider economy cannot be ignored. The house price to income ratio is already at its highest ever level, and with interest rates on the rise and inflation further squeezing household budgets, it remains likely that the rate of house price growth will slow by the end of this year.”
Mark Harris, chief executive of SPF Private Clients, said that in light of the interest rate rise and with the potential for more to come in the future, brokers are “being key busy”.
“Borrowers are increasingly concerned about rising mortgage rates and are keen to secure a fixed rate in particular before they rise further. Longer-term fixes are increasingly popular as borrowers hunt for security. With lenders pulling some deals with little or no notice though, decisions have to be made quickly,” he said.
House prices expected to taper this year
Industry figures said the statistics showed that despite the increasing cost of living and other factors, there was still heightened demand for housing.
Sundeep Patel, director of sales at Together said even with the rising cost of living, property deals were “completing at record rates”.
However, he said that with surging food and fuel prices, and typical mortgage rates set to double, first-time buyers could “face tough affordability challenges”.
“There remains too many buyers chasing too few properties and the frenzied spring moving season will be fuelled by an excess of demand and competitive pricing. But as budgets continue to tighten and people’s financial priorities shift, the property market boom may start to taper off as households reorder their finances and ability to spend,” Patel said.
Stuart Law, chief executive of the Assetz Group, said the market was being driven by low interest rates and a desire to change lifestyles post-pandemic.
However, he said that rising interest rates could “take some heat out of the market” and a “desire to curb living costs will come to the fore” in light of the cost-of-living crisis.
He said that a new generation of buyers were increasingly opting for modern properties that “reduce energy and maintenance issues, and improve comfort and quality of life”, and this trend would become “further defined”.
“We need to boost our stock of new homes urgently to meet growing demand. Currently, the housebuilding sector is held back by an overbearing planning system, economic challenges around cost of labour and materials, and ongoing supply chain interruptions in the wake of Brexit and the war in Ukraine,” Law explained.
He added that these challenges were hard to overcome as there was “little to no interest from traditional lenders in providing flexible, bespoke finance solutions to the industry”. He said this was especially the case for SMEs, leading to a fall in SME housebuilders.
