UK house prices continue to rise, but at the slowest annual rate so far this year.
House prices increased by 1.0% in May, the eleventh consecutive monthly rise, according to the latest Halifax survey, with the average price at a record £289,099.
Annual house price inflation edged down from 10.8% in April to 10.5%.
But the Halifax points out that house prices have risen 74% in the last 10 years
Russell Galley, Halifax managing director, said: “The average cost of buying a home in the UK is up 1%, or £2,857, on last month, and has now risen for eleven consecutive months. Annual growth also remains in double-digits, at 10.5%, although this is the slowest rate of growth seen since the start of the year
“The average cost to buy a home in the UK is now £289,099, hitting yet another record high. Despite the very real cost of living pressures some people are experiencing, the imbalance between supply and demand for properties remains the primary reason driving the continued climb in house prices.
“For house hunters, the extent of the impact of property price inflation continues to be linked to the type of home they are looking to buy. Compared to May last year, you’d need around £10,000 more to buy a flat, but an additional £50,000 for a detached home. This clearly creates a knock-on effect for those looking to make their first home move, as the rungs on the housing ladder have become increasingly wider
“However, the housing market has begun to show signs of cooling. Mortgage activity has started to come down and, coupled with the inflationary pressures currently exerted on household budgets, it’s likely activity will start to slow.
“So, there is perhaps one green shoot for prospective purchasers; with overall buying demand down compared to last year, we may be past the peak sellers’ market.”
Graham Cox, founder of Bristol broker, SelfEmployedMortgageHub.com, said: “I believe house prices will fall by 5% this year and possibly even more in 2023. Property prices are already coming off their record highs and transaction levels are falling. Mortgage costs, fuel, food and energy prices continue to soar with no end in sight. Throw in National Insurance and tax hikes, the terrible events unfolding in Ukraine and the autumn energy cap increase and it's a recipe for economic disaster that we won't see the full effects of until the winter. There is nowhere for house prices to go but down.”
Jonathan Hopper, chief executive of Garrington Property Finders, said: “Despite double-digits dominating this index for four months on the trot, the property market is slowing and some people are having a hard time accepting it.
“Both net mortgage borrowing and approvals have slumped recently. It’s a big wake-up call for a frothy housing market two years in the making that we’re seeing the last days of foam...
“Lack of supply is still a problem in some areas, particularly with the most sought after properties, and sellers are still trying to use that to extract a high price. However, buyers are now increasingly nervous about overpaying and are trying to price that into deals.
“All the signs are that we are not going to see a crash, but the rate of price growth could come down quite dramatically from here."