Despite the squeeze, price of a home surges to record high

HOUSE prices hit a record high of £294,260 in August despite worries about the cost of living squeeze, figures showed yesterday.

The average home rose in value by 0.4 per cent last month, offsetting a 0.1 per cent dip in July, according to data from mortgage lender Halifax.

The annual rise was 11.5 per cent, or just over just over £30,300, in the year to August.

London saw its highest annual price growth in six years, with the average home in the capital now worth £554,718.

Meanwhile, prices in Wales soared by 16.1 per cent to £224,858, its strongest period of growth since 2005.

But experts warned that the market is likely to cool as the cost of living crisis tightens its grip and mortgage costs rise. Last month the Bank of England raised its base rate by 0.5 percentage points to 1.75 per cent – the steepest increase in 27 years.

And with economists forecasting another rise next week, interest charges on home loans are likely to surge further.

In the meantime, inflation, which is at a 40-year-high, is also piling further pressure on living costs and buyers’ budgets.

Kim Kinnaird, director of Halifax Mortgages, said: ‘While house prices have so far proved to be resilient in the face of growing economic uncertainty, industry surveys point towards cooling expectations across the majority of UK regions, as buyer demand eases.’ Andrew Montlake, managing director of broker Coreco, added: ‘Higher mortgage rates and the immense pressure on household finances will almost certainly start to temper demand in the months ahead.’

Last year a lack of supply fuelled a red-hot market, with bidding wars in many parts of the country. And with the base rate at a historic low of 0.1 per cent, buyers rushed to secure cheap mortgages.

But experts say the market has shifted significantly since then.

Tom Bill, of estate agency Knight Frank, said: ‘We expect more properties to be listed in the coming weeks as we move from a seller’s towards a buyer’s market. Together with rising mortgage rates, this will increase downwards pressure on prices.’

But some believe Liz Truss could boost the housing market by freezing energy bills. She will announce details of the policy today.