House Price Rollercoaster Is Just Starting

Couple looking at a house for sale

The golden age of double-digit house prices boosting wealth for homeowners and property investors is almost over.

The value of homes in the UK jumped by 13 per cent in the 12 months to June, but this amazing runaway growth is set to hit the buffers, warn the experts.

But don’t worry too much. House prices will keep going up, just not anywhere near the double-digit figures of the past few months.

The market will likely see high numbers for the next couple of months while the survey data catches up with what’s happening in towns and cities across the country.

The latest statistics from the Land Registry show a 12.8 per cent increase in the year to May, but analysts say the market is unlikely to witness similar rises for a while. That’s not to say prices won’t keep rising, but the growth rate will decelerate.

House Prices Up £32,000 In A Year

The Land Registry revealed the average price of a UK home leapt by £32,000 in the past year to £283,000. The end of May marked a purple period for house prices. The month was the seventh in a row that prices climbed, and the growth rate was the highest for a year.

May also marked 13 years of near continuous house price increases since April 2009, when the average home was worth £156,000.

On the up – UK house prices since 2006

On the up - UK house prices since 2006

House Price Boom Areas

Homes in the South-West and East Midlands have soared in value as the rest of the market prospered.

In May, the South West posted price growth of 16.9 per cent year-on-year, while homes in the East Midlands added 15.2 per cent of value.

House prices have gone up the slowest in London – 8.7 per cent in the year – and the North East, which filed a 9.2 per cent increase.

House price records tumbled across the UK in May.

  • In England, the price of an average home nudged £302,000 – £3,000 more than the month before.
  • In Wales, prices jumped 14.4 per cent to £212,000.

House price changes in England

House price changes in England

Market Is Cooling, Warn Estate Agents

Estate agents and mortgage lenders are warning the market is cooling.

The latest market review from the Royal Institution of Chartered Surveyors (RICS) explained the industry is witnessing a fall in the number of properties put up for sale. This drop in stock for sale is underpinning house price rises by removing choice.

The Nationwide agreed a lack of property to sell was buoying the market while posting annual growth of 10.7 per cent in the year to June – down from 11.2 per cent in May.

“There are tentative signs of a slowdown, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer enquiries,” said the society’s chief economist Robert Gardner.

“Nevertheless, the housing market has retained a surprising amount of momentum given the mounting pressure on household budgets from high inflation, which has already driven consumer confidence to a record low.”

Lack Of Homes To Sell

Rivals The Halifax takes the opposite view.

The lender says June saw the most significant annual price rise for 15 years – up 13 per cent.

“The supply-demand imbalance continues to be the reason house prices are rising so sharply. Demand is still strong – though activity levels have slowed to be in line with pre-Covid averages – while the stock of available properties for sale remains extremely low,” said managing director Russell Galley.

“The housing market will not remain immune from the challenging economic environment. But for now, it continues to demonstrate – as it has done over the last couple of years – the unique combination of factors impacting prices. One of these remains the huge shift in demand towards bigger properties, with average prices for detached houses rising by almost twice the rate of flats over the past year.”

Is A Price Crash Coming?

So, is Britain facing a house price crash?

Never say never, but the likelihood is landlords, and other homeowners are heading for more moderate price growth rather than a drop in values.

It’s worth noting Britain’s housing market is sewn together from thousands of neighbourhood markets which move for local as well as national reasons. Because of this, prices react differently in Central London when compared to the industrial landscape of the north.

This view is backed by the house price data gathered by the various house price reports.

One of the most influential is published by the estate agent trade body RICS.

“Survey results again point to a softening in demand at the headline level. Nevertheless, with new instructions generally remaining fl at over recent months, tight supply is still underpinning house prices. Indeed, for now, at least, respondents continue to cite an increase in house prices across all parts of the UK, even if the pace of growth looks to be easing to a certain degree.

“At the national level, the latest net balance for new buyer enquiries slipped to -27%, down from a reading of -9% previously. As such, this marks the second consecutive month in which the survey’s headline measure of demand has been negative.”

House Price FAQ

Why are average house prices different in every report?

The reports draw their data from different sources and periods. The Nationwide and The Halifax reports have a strong grounding in customer data, while the ONS collects information from larger samples, like the Land Registry.

Why give an average house price when there’s no such thing?

The figure is calculated by adding up the value of each housing transaction in a period, divided by the number of homes changing hands,

What’s the asking and sale price?

The asking price is the value a seller puts on a property, while the sale price is what the buyer paid.

Where are house prices the highest?

Although house prices are rising slowest in London, homes are worth more – an average of £526,000.

Where are the lowest house prices?

The cheapest average home price of £154,000 is in the North East.

Below is a list of some related articles, guides and insights that you may find of interest.

Questions or Comments?

We love to get feedback from our readers. So, after reading this article, if you have any questions or want to make comments, send us a message on this site or our social media?

Don’t forget that you can also request the guides sent directly to your email inbox.

Leave a comment