According to the Halifax’s house price index, it is the eleventh month of consecutive increases, but the pace of growth has begun to slow.
At the start of the year annual house price growth was 9.7 per cent, rose to 11.2 per cent in February and then started falling from March to 11.1 per cent then 10.8 per cent in April.
Monthly house prices have gone up by one per cent, or £2.857, which compares to 1.2 per cent in April and 1.5 per cent in March. In May last year the monthly price change was 1.3 per cent.
The report added that homebuyers would need £10,000 more to buy a flat than they did last year, and a further £50,000 to buy a detached home.
Regionally, nine regions in the UK reported double-digit annual growth, barring Yorkshire and the Humber and London which recorded single-digit growth.
Northern Ireland reported the strongest house price growth at 15.2 per cent, with average house prices emerging at £185,386.
This was followed by the South West at 14.5 per cent, with average house prices of £305,173, and Wales at 13.7 per cent, bringing average prices to £216,120.
London recorded the lowest annual growth at 6.3 per cent, but average house prices were the most expensive at £541,942.
Overall, the average cost of a home rose by 74 per cent, or £123,016 over the past decade, with the strongest growth coming from London at 84.2 per cent, the East of England at 84 per cent and East Midlands at 82.1 per cent.
This means homebuyers in London now need £247,638 more than a decade ago, those in the East of England require £153,930 more and buyers in the East Midlands need £108,116 more.
Russell Galley, managing director at Halifax, said that whilst annual growth remained in double digits, it was the slowest rate of growth since the start of the year.
He added that the “imbalance between supply and demand” for properties was the main reason for the climb in house prices.
Galley said: “The housing market has begun to show signs of cooling. Mortgage activity has started to come down and, coupled with the inflationary pressures currently exerted on household budgets, it’s likely activity will start to slow.
“So, there is perhaps one green shoot for prospective purchasers; with overall buying demand down compared to last year, we may be past the peak sellers’ market.”
Market showing signs of slowdown
Tomer Aboody, director of property lender MT Finance, said that the report showed that the market had been reporting month-on-month growth for nearly a year, which was “fuelled by eager buyers looking for more space, while taking advantage of the low interest rate environment”.
He noted that the fact that house prices had risen by 74 per cent in the past decade showed how much the market was running away from first-time buyers.
“With many years of record low interest rates, buyers have been unwittingly pushing up prices due to lack of supply, taking on bigger mortgages to afford more expensive homes,” he explained.
Aboody noted that as mortgage rates were going up with inflation, a slowdown was evident and buyers were less confident about stretching themselves, especially for properties that needed work. This was also partially due to rising costs of material and labour.
Conor Murphy, chief executive of Smartr365, said that 11 months of consecutive house price growth should “put to bed many of the worst fears consumers, commentators and industry professionals have about the health of the market”.
However, he said that the cost of living crisis, as well as looming recession, meant that predictions about the property market should be more “realistic”, as historic house price growth and current transactions could only be sustained for so long.
Murphy added: “Advisers should take advantage of this period of growth to make certain that the homebuying process is as smooth as possible. Efficiency will likely be critical later in the year as interest rates look likely to rise and as transaction numbers begin to level off.
“It is vital that the groundwork is laid now before it’s too late. Investing in mortgage tech will enable brokers to process mortgage applications quickly and efficiently whilst leaving advisers with the capacity to provide the industry expertise clients come to them for.”
Lenders’ need to make ‘clear and considered assessments’
Steve Griffiths, sales director at The Mortgage Lender, said that “spiralling inflation, rising living costs, and plunging consumer confidence” was setting the scene for a market slowdown, which was illustrated by buyer demand faltering due to affordability.
He said: “With the rising cost of living showing no signs of abating, it’s important lenders are making clear and considered assessments based on individual’s situations.
“For those looking to set foot on the housing ladder or remortgage, it’s essential they shop around, looking beyond traditional lenders who may offer alternative options that might better help support their property ambitions.”