House prices hit record high in May, but market shows signs of cooling

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Average house prices hit a record high of £289,099 in May, but the market is showing signs of cooling, according to an index.

In the UK, typical property values ​​rose £2,857 month over month in May, Halifax said.

An imbalance between supply and demand for housing remains the main reason behind the increase, the report said.

Compared to May last year you would need around £10,000 more to buy a flat but £50,000 more for a detached house

Russell Galley, director of Halifax, said: “The average cost of buying a home in the UK rose by 1% or £2,857 last month and has now risen for 11 consecutive months.

“Annual growth also remains in double digits, at 10.5%, although this is the slowest growth since the start of the year.”

He continued: “For home hunters, the magnitude of the impact of property price inflation remains linked to the type of home they want to buy.

“Compared to May last year you would need around £10,000 more to buy a flat, but £50,000 more for a detached house.

“This is clearly creating a knock-on effect for those who want to move for the first time, as the rungs on the housing ladder have become wider and wider.

The housing market is starting to show signs of cooling

“However, the housing market is starting to show signs of cooling.

“Mortgage activity is starting to slow down and, combined with the inflationary pressures currently being exerted on household budgets, it is likely that activity will start to slow down.

“So there may be a green shoot for potential buyers — with overall buying demand lower than last year, we may be past the peak seller market.”

Northern Ireland had the strongest annual house price inflation in May, with prices rising 15.2%.

The South West of England also registered strong annual growth of 14.5%.

House prices in Wales rose by 13.7% annually, bringing the average house price there to a record £216,120.

Only Yorkshire and the Humber, Scotland and London recorded annual house price inflation of less than 10% in May.

In Scotland, Halifax says house price growth remains “under par” relative to the UK average, with an annual inflation rate of 8.3%.

Ten years ago, annual house price growth in London was the strongest in the UK, with annual house price inflation at 4%.

Southern England was at that time leading a recovery in property prices after the difficult economy of 2008 and 2009.

With prices up 74% in the last ten years, this shows how much the market is running away from new buyers

Over the past decade, the cost of a home has generally risen by 74%, or £123,016, Halifax said.

The strongest inflation in that period was in London (84.2%), followed by the East of England (84.0%) and the East Midlands (82.1%).

In cash, house hunters in London need £247,638 more than those looking 10 years ago, while those in the East of England need £153,930 and those in the East Midlands typically need an extra £108,116.

Alice Haine, personal finance analyst at investment platform Bestinvest, said: “The latest data from the Halifax House Price Index adds to the mounting evidence that home price growth is being impacted by the uncertainty facing the economy at large. .

“With rising house prices, lower disposable incomes and fewer people with the right debt-to-income ratio to qualify for a mortgage, some first-time buyers may be delaying their entry into the housing market, while existing homeowners may be able to stick with their current home. , instead focus on a renovation or expansion.”

Tomer Aboody, director of real estate lending company MT Finance, said: “With prices rising 74% over the past ten years, this shows how much the market is running away from first-time buyers.”

Nicky Stevenson, managing director at brokerage group Fine & Country said: “In this uncertain economic environment, there is a sense that the housing market is at a crossroads, with future earnings likely not to match the huge spikes recorded over the past 12 months.

“While there is still a strong need among existing homeowners to trade-in, the supply scarcity that has led to record growth in the recent past is slowly easing.

“As the supply-demand imbalance continues to narrow, annual profits are expected to decline further in the coming months.”

Martin Beck, chief economic adviser to the EY ITEM Club, said: “The prospect of households seeing their real incomes fall this year due to high inflation means fewer people can afford to borrow the amount they need at higher mortgage rates.”

Jason Tebb, chief executive officer of the property search website OnTheMarket.com said: “Despite significant headwinds, a remarkable level of buyer and seller confidence in the market remains.”

Here are the average home prices in May and the annual increase, according to Halifax:

– East Midlands, £239,859, 12.3%

– East England, £337,216, 11.6%

– London, £541,942, 6.3%

– North East, £166,449, 10.6%

– North West, £219,849, 10.6%

– Northern Ireland, £185,386, 15.2%

– Scotland, £198,288, 8.3%

– South East, £391,845, 11.4%

– South West, £305,173, 14.5%

– Wales, £216,120, 13.7%

– West Midlands, £244,071, 10.6%

-Yorkshire and Humber, £200,469, 9.5%

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