Home prices rose at their fastest pace since 2007, reaching a record high last month, according to research by Britain’s largest mortgage lender.
Prices have risen 10.8 percent year-on-year since February, following a slowdown in January. Homes were also about 0.5 per cent, or 47 1,478, more expensive last month than in January. The average house price set another record at £ 278,123 after eight consecutive months of growth recorded by the Halifax index.
Stamp Duty Holiday, which offered potential buyers savings of up to ,000 15,000 for purchases made before 30 September last year, boosted demand and pushed the average price of a property in the UK to 6 276,091 last year. The average value of the cash position rose to £ 27,215 in February of the year, marking the largest such increase since the index began 39 years ago.
Pressure on the household budget will reduce home demand and prices are expected to fall later this year.
Russell Galli, managing director of Halifax, said the lack of home supplies in the market had driven up prices. “This could be a particular problem on the larger edge of the property market,” he said. “In the last one year, the average value of a detached property has more than quadrupled in cash compared to a flat.”
He added: “Looking to the future, as Covid moves to a local level and almost all domestic restrictions are lifted, geopolitical developments expose the UK to a new source of uncertainty.
“The war in Ukraine is a humanitarian tragedy, but it could affect confidence, trade and the global supply chain.”
Wales recorded the fastest growth, with prices rising 13.8 per cent year-on-year since February. However, the average price of a home in Wales is, 207,184, significantly lower than the UK average.
Home prices in the south-west of England rose 13.4 per cent, the strongest growth in the last quarter. The average house price there is 293,968.
London again showed the weakest growth, with home inflation at 5.4 percent. The capital has been particularly hard hit by the exodus of immigrants since the Brexit rule came into force early last year, and an increase in remote and hybrid work, which allows people to live further away from their offices.
Inflation is rising in the capital, but the February figures reflect the highest inflation rate since the end of 2020.
Andrew Barrell, chief property economist at Capital Economics Consultancy, says lower mortgage rates, higher levels of household savings and increased demand for housing from new remote work arrangements will contribute to house price inflation in the coming months.
However, he predicted that the pace of inflation would slow down in the second half of the year.
“With policy tightening, mortgage rates are set to rise, while other pressures on household income could weigh on demand later this year,” Burrell said. “In our view, house price growth will remain strong until the summer, but will slow to 5 percent [year-on-year] In the fourth quarter of 2022, though, it is stronger than most expected. “