House price growth accelerates

THE race to lock in cheap mortgage deals before interest rates climbed higher sent house price growth surging to a 16-year high, official figures show.

Average values jumped by 12.4pc in April, up from 9.7pc in March, according to the Office for National Statistics.

This was the highest rate of growth recorded in at least 16 years, excluding June 2021, when house price growth hit 13.3pc as buyers raced to transact before the stamp duty holiday was tapered.

The average UK house price was £281,000 in April, which was £31,000 higher than this time last year.

Analysts warned that these figures do not reflect the current state of the cooling market, as ONS data operate on a lag. The Bank of England has increased the Bank Rate twice since the April data were collated, meaning mortgages are now significantly more expensive.

Andrew Montlake, of broker Coreco, said: “The era of ultra-cheap money is finished and that will soon start to feed through into house price growth.”

The average rate on a two-year fixed mortgage with a 25pc deposit has surged from 1.57pc to 2.63pc in the six months to May. Pantheon Macroeconomics forecasts this will hit 3.7pc by the end of this year. It expects house price growth to plunge to 5pc over the same period.

Gabriella Dickens, a Pantheon Macroeconomics analyst, added that the data was also skewed by the 1.2pc monthly house price fall recorded in April 2021. This was because prices rose to a temporary high a month earlier in anticipation of the end of the stamp duty holiday, which was postponed at the last minute.