South West tops UK for house price increases

HOUSE prices in the South West hit a new record high in March. Average house prices in the South West were up by 14.6% last month – the region’s highest rate of annual increase since September 2004. The average house price was £298,162, marking a record for the region.

The South West has now overtaken Wales as the region with the fastestrising house prices, the Halifax said.

Across the UK, house prices hit a new record high of £282,753 in March. House prices have risen by 18.2%, or £43,577 on average since the first UK lockdowns around two years ago, according to an index from Halifax.

Russell Galley, managing director of Halifax, said: “The new record price of £282,753 is up some £28,113 on a year ago, not far off average UK earnings over the same period (£28,860).

“The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on households’ finances.

“Although there is some recent evidence of more homes coming on to the market, the fundamental issue remains that too many buyers are chasing too few properties.”

He said that in the long term “we know the performance of the housing market remains inextricably linked to the health of the wider economy”.

He added: “There is no doubt that households face a significant squeeze on real earnings, and the difficulty for policymakers in needing to support the economy yet contain inflation is now even more acute because of the impact of the war in Ukraine.

“Buyers are therefore dealing with the prospect of higher interest rates and a higher cost of living. With affordability metrics already extremely stretched, these factors should lead to a slowdown in house price inflation over the next year.”

The report said the impact of the pandemic on buyer demand can be seen when looking at different property types – with homes offering more space commanding bigger premiums.

Average prices for flats have increased by 10.6% or £15,404 over the past two years. The average price of a detached property meanwhile has leapt by 21.3% or £77,717 over the same period.

Looking across the UK, the South West of England has overtaken Wales as the strongest performer in terms of annual price house inflation, Halifax said.

Tom Bill, head of UK residential research at estate agent Knight Frank, said: “At some point in the near future the cost-of-living squeeze and rising mortgage rates will pull prices back down to earth.”