Halifax has confirmed record house prices in its Housing Price Index (HPI) released today, and said monthly prices had grown 1.4% at its highest increase in six months.
The index revealed that the average house price reached a new record high of £282,753, with the two years since lockdown seeing a £43,577 increase as consumers sought out more space and better houses in the wake of the Covid-19 pandemic.
Families in particular searched for more space away from cramped conditions as the coronavirus spread rapidly across the UK and lockdown restrictions kicked off in March 2020.
“The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on households’ finances,” said Halifax managing director Russell Galley.
“Although there is some recent evidence of more homes coming onto the market, the fundamental issue remains that too many buyers are chasing too few properties.”
“The effect on house prices makes it increasingly difficult for first-time buyers looking to make their first step onto the ladder, but also challenges homemovers who face ever bigger leaps to move up the rungs to a larger property.”
The Halifax HPI report estimated that the rising rate of inflation and the cost of living squeeze would bring a slowdown in the housing market over 2022.
However, this trend prediction is not necessarily guaranteed, with some analysts projecting that the housing market growth could continue despite the spiking rate of inflation.
“While other sectors like energy and food have been consistently increasing, the housing market may begin to suffer a slowdown in demand if the current rate of increase continues as more consumers start to struggle to enter the market,” said Walid Koudmani, chief market analyst at financial brokerage XTB.
“On the other hand, demand at current levels remains high and could sustain a continuation of this trend despite measures by the central bank designed to mitigate inflation.”
