House Price Growth Returns to Double Digits

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According to new data released by Land Registry, annual house price growth in the UK has returned to double digits.

The annual growth figure increased from 7.8%, to 15.5% in June 2022. This is the highest rate in almost two decades.

Monthly house price growth saw a decrease in June of 4.8% but then saw an increase of 2% in July. This brought the average UK house price of £292,118. This meant house prices were up by £6,000, compared with a fall of £13,000 between the same months last year.

In the year to July 2022, the South West saw the strongest house price growth. Prices increased by 20.7%. London saw the lowest annual growth where prices increased by 9.2% in the year to July 2022.

Tom Bill, head of residential research at a London estate agency, commented: “The large jump in house prices recorded in July tells us more about how a Stamp Duty holiday can alter the course of the housing market than where prices are headed next.

“The new government’s energy support package combined with record low unemployment will help oil the wheels of the property market but rising mortgage rates will ultimately curb the double-digit price growth seen over the last two years although we don’t expect prices to fall.

“The government is effectively in pre-election mode and further tax cuts will benefit the housing market in the short-term. The risk is that fiscal largesse today means rates will eventually need to rise faster.”

Karen Noye, mortgage expert at Quilter (a wealth management company) added: “This is the highest UK annual inflation rate since May 2003.

“While this increase appears stark at first glance, it is worth noting the jump was largely as a result of the fall in prices seen this time last year due to changes to the stamp duty holiday. Even still, the average UK house price now sits at £292,000 – a whopping £39,000 higher than this time last year.

“The housing market has so far remained resilient despite the ongoing cost-of-living crisis. While the latest UK inflation data released this morning showed a slight fall to 9.9% last month, a higher peak is still expected to materialise over the coming months and as such the Bank of England is expected to continue hiking interest rates and the current resilience may well falter as a result.”

Karen has further predicted that buyers are going to become more cautious as interest rates and energy bills rise: "While Prime Minister Liz Truss has now introduced a £2,500 cap on energy prices, many will still feel the squeeze financially and this could put a halt on people’s plans to move home.

“Whether these ongoing issues translate into a fall in house prices will not be seen for some time yet, though this may well be the case if the winter proves to be as difficult as predicted.”

Many property professions are urging the Bank of England from raising interest rates further.

It is widely anticipated that the current figure of 1.75% is going to increase for the sixth consecutive month this week.

A spokesperson for the National Association of Property Buyers claimed that those who are cutting back their spending would be affected by another rate rise.

The spokesperson, Jonathan Rolande, said: “Consumers have already begun to cut back on spending.

“This is exactly what the Bank of England wanted to see and we should now see inflation drop over the coming months.

“I hope that in light of increased energy costs and indeed everything else as we approach winter, interest rates are not increased. The mortgage market is split into three, with a third having no mortgage, a third on fixed rates and a third on variable rates.

“Another increase in rates will only affect this smaller section of the market who are more than likely already cutting back on whatever they can.

“The very crisis caused by inflation may be key to the economy stabilising as all unnecessary spending stops. More interest rate rises may push those ‘just about managing’ over the edge.”

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