In Halifax’s latest housing price analysis, a record high price of £278,123 in housing prices was established, with a rise of 10.8% over the past year, the fastest annual pace since 2007.
Dating back to January 1983, Halifax House Price Index has been providing data regarding the monthly house price series for the entire UK. A standardised house price is constructed using the statistics, and property price fluctuations on a like-for-like basis including adjustments based on season are examined through that period. The percentage change amount for the year is equated by comparing the same month over the current year to the previous year with the exception of seasonal adjustments.
Month on month growth rose to 0.5%, despite a deceleration at the beginning of the year. As a result, the annual growth rate was 10.8%, the highest level since the annual growth rate of 11.9% in June 2007.
Walid Koudmani, Chief Market Analyst, at financial brokerage XTB comments, “house prices rose at the fastest annual pace since 2007 and reached a new record high according to today’s Halifax HPI report with monthly house price growth rising to +0.5% following a slower start to the year.”
“While the annual rate of growth increased by +10.8% and reached the strongest level since June 2007, the impact on household finances is still expected to weigh on the market this year as rising inflation and increased costs could undermine the post pandemic economic recovery and slow down the housing market significantly as demand becomes severely impacted.”
With the housing prices reaching an average of £278,123 as a result of deficits in supply, and consumers tightening their belts, there are expectations of a slump in the market in the coming year.
Current geopolitical scenarios are impacting oil and gas prices, which will have an impact on inflation in the UK, which is already at a 30 year peak. Along with that, increased bank rates expected in the near future, will also have an impact on the market.
Performance by Region
Amongst the strong performers in the UK, the Welsh region stood out yet again with average property price rising by 13.8% to £207,184. In the southwest of England, growth in housing prices saw a 13.4% increase with the average house price of £293,968. This region also had the strongest quarter growth of 3.5%. Both of these regions have access to more picturesque sites, which gained popularity with buyers during the pandemic in a ‘race for space’.
Norther Ireland saw a 13.1% growth in price to average housing prices of £173,911 in February.
Amongst the weaker regions, Scotland and London both saw a growth of 9.2% and 5.4% respectively. In February, the average property price in Scotland was £193,777.
Russell Galley, Managing Director, Halifax, said, “this was an eighth successive month of house price growth, as the resilience which has typified the market throughout the pandemic shows little sign of easing.”
“Two years on from the start of the pandemic, average property values have now risen by £38,709 (+16%) since February 2020. Over the last 12 months alone house prices have gained on average £27,215. This is the biggest one-year cash rise recorded in over 39 years of index history.”
“Lack of supply continues to underpin rising house prices, with recent industry surveys showing a dearth of new properties being listed, now a long-term trend. This may be a particular issue at the larger end of the property market. Over the past year the average price of detached properties (£43,251, +11%) have risen at a rate more than four times that of flats (£10,462, +7%) in cash terms.”
Housing Activity
Increased sales in UK homes according to HMRC monthly property transactions data, from 101,840 in December 2021 to 106,990 in January 2022 on a seasonally adjusted (SA) basis. Although a 9.9% decrease was seen in the quarterly SA transactions from the August 2021-October 2021 to the November 2021-January 2022 period. Overall decrease of 10.6% in SA transactions from January 2021 to 2022.
Mortgage approvals rose by 4% to 73,992 in January 2022 according to the latest Bank of England numbers. However, on a YoY basis, January 2022 numbers were down 23%.
According to the RICS Residential Market Survey, an consecutive increase in new buyers was observed, with a net balance of 16%. New instructions declined by 8%.