House prices hit record high – but boom is slowing
THE average price of a home has hit £368,614 –a record high for the fifth month in a row, according to Rightmove.
Prices edged up by 0.3 per cent but the pace of the rise is slowing, the property website said in a report.
Despite a string of interest rate hikes and the increasing cost of living, demand for properties remains very strong, it said.
But after a strong first half of the year, it is likely that affordability constraints will have a greater influence on market behaviour in the months ahead, it predicted.
This, alongside more choice coming onto the market for buyers and usual seasonal variations, means there are likely to be some month-on-month price falls during the second half of the year.
Tim Bannister, Rightmove’s director of property science, said: ‘Entering the second half of the year, we anticipate some further
‘Taking time to filter through’
slowdown in the pace of price rises, particularly given the worsening affordability challenges that people are facing.
‘We expect this to bring the annual rate of price growth down from the current 9.7 per cent towards the 5 per cent increase that Rightmove predicted at the beginning of the year.’ Economic forecasting group EY ITEM Club said that it expects UK house prices to rise 8 per cent over the course of 2022, followed by growth of 1.8 per cent in 2023 and 1.2 per cent in 2024.
Peter Arnold, its chief economist, said: ‘In previous economic cycles, a house price contraction would be on the cards with incomes squeezed providing a high chance of a market correction after two years of outsized growth.
‘But rising interest rates are unlikely to affect homeowners in the same way they would have done previously, with the dominance of fixed-rate mortgages meaning rate changes will take some time to filter through to borrowers.
‘Crucially, the economy is also not seeing the high levels of unemployment that have been a key factor in previous house price contractions.’
Another report released today by Yorkshire Building Society found that around three in five people (59 per cent) believe their current home meets none, or only some, of their needs.
Nearly a quarter (23 per cent) of those looking to downsize pointed to the lack of suitable or available supply as their biggest barriers to moving, according to the report.
Yorkshire Building Society economist Nitesh Patel said: ‘Demand for housing has far outstripped supply for years, but it’s not just the quantity of houses we’re lacking, but the type and suitability of properties coming to market – be that new or existing homes.’