UK average house prices increased by 12.8% over the year to May 2022, up from 11.9% in April 2022 – ONS HPI May 2022
Andy Sommerville, Director at Search Acumen, says:
“The latest ONS data demonstrates that, despite cost of living pressures acting as a brake on price growth, house prices remain extremely high by historic standards.
“As each month passes, interest rates, inflation, and other cost of living pressures, are intensifying and it is likely that there will be further strain placed on household finances in the upcoming quarters, particularly as inflation is forecast to reach double digits and energy bills are set to rise again in the autumn. Nevertheless, while economic turbulence will inevitably and increasingly act to stymie house price growth, prices will continue to stick at peak levels for some time because of an unprecedented set of market dynamics. Post pandemic lifestyle preferences are proving incredibly powerful in driving demand. This, combined with persistent low supply, continues to offset the impact of cost of living on pricing. At the same time, while cost of living is having an impact for many first time and lower income buyers, mortgage rates are still low by historic standards, which is allowing many buyers to continue pursuing purchases despite strong pricing and rising household bills.
“While that dynamic is stubbornly holding firm at the moment, interest rates may increase significantly as the Bank of England attempts to combat the fastest pace of inflation for forty years. As rates go up, this could impact pricing and exclude some buyers from the market. More immediately though, this reinforces the urgent need for rapid progress in digitising our property sector to drive efficiencies. Many buyers are going to be pushing hard to complete purchases as quickly as possible before rates rise further. We need to ensure the sector can cope with high levels of market activity as well as an increased urgency from buyers and sellers to get sales over the line in record time before the cost of their mortgage goes up further.”
