House prices jump £32k in a year, says ONS

House prices rose 12.8 percent in the year through May, up from 11.9 percent in April, marking the seventh consecutive month of increases, according to the ONS Property Price Index.

The rebound means the typical home price in Britain was £283,000 in May, or £32,000 more than the same period last year.

Wales experienced the highest rate of growth in house prices, rising 14.4 per cent over the year.

On the Rise: House prices have continued to rise for seven straight months despite rising inflation and interest rates putting pressure on the market

The extension of the tax break in England, Wales and Northern Ireland until June 2021 is likely to have pushed prices higher in previous months as shoppers rushed to boost their purchases ahead of the end of the tax break.

Northern Ireland remains the cheapest country to buy a house with an average price of £165,000.

However, the cheapest houses anywhere in the UK are in the North West, where the average price is currently £154,000.

In the South West, prices were up 16.9% through May 2022, up from 14.7% in April, the biggest increase anywhere in Britain.

This is in stark comparison to London’s price increases of 8.2 per cent, the lowest growth rate nationally, albeit from a much higher price point.

Nick Leeming, Chairman of Jackson-Stops, said: “While prices are still reaching new heights despite an increasingly challenging backdrop for buyers, the late summer months will provide the real temperature check for the market.”

‘Our own data indicates a continually busy market which has seen both property listings and exchanges increase in July.

“Broader economic factors such as inflation and rising interest rates will naturally start to squeeze the lower end of the market as the year progresses.

“But for now, it’s playing into the hands of sellers who continue to benefit from the buy buzz as engines look to get competitive mortgage rates ahead of further Bank of England announcements.”

Supply-side problems: Property experts blame the lack of home stocks for the continued rise in home prices despite economic conditions.

Supply-side problems: Property experts blame the lack of home stocks for the continued rise in home prices despite economic conditions.

Mark Harris, chief executive of mortgage broker SPF Private Clients, warns of the impact that the 9.4 percent inflation rate and potential additional interest rate increases may have on the market.

‘Mortgage rates remain competitive although they are increasing. Borrowers must move quickly to secure the best fixed rates, as they often withdraw on short notice.

“Since service levels vary considerably between lenders, it can take longer than borrowers anticipate, especially if their case is complex, so counseling is more important than ever.”

This month, average mortgage rates rose 0.5 percentage points, and interest rates on home loans hit highs not seen since the mid-2010s.

House prices in the South West of England grew faster than any area in the UK, rising 16.9% in the year to May 2022.

House prices in the South West of England grew faster than any area in the UK, rising 16.9% in the year to May 2022.

Ross Boyd, founder of the ever-on mortgage comparison platform Dashly.com, said: ‘More crazy house price growth in May, but things have gone downhill ever since.

‘Mortgage rates have been rising at a rate of knots, and there will almost certainly be more rate hikes on cards as the Bank of England tries to rein in inflation, which is now at 9.4 per cent.

‘It is inconceivable to think that the housing market will not be affected by the current interest rate cycle, which is now firmly on an upward trajectory.

‘The housing market will cool off throughout 2022 and into 2023. When it comes time to remortgage, it will be less of a case of rate shock for many borrowers, but it will be of rate trauma. The pending mortgage crisis will add significantly to the cost of living crisis.’

Jeremy Leaf, North London estate agent and former RICS residential chairman, added: “As we are finding out on the sharp end, prices are continuing their bullish path, despite the impact of 40-year high inflation and five successive rises in interest rates”.

“However, the continued lack of choice, combined with the desire to take advantage of super-low rate mortgage deals before they expire, have given the market an additional boost.”

Others point out that a lack of housing stock is driving prices higher despite economic pressures, which means we are unlikely to see a price correction as the market is still in the hands of potential sellers.

Stuart Law, Chief Executive Officer of Assetz Group, commented: “Rising interest rates and high levels of inflation are beginning to have some impact in moderating the excess demand for housing over supply, but have yet to have a impact close enough to tip the balance, leading to falling prices.

“However, while demand remains high and prices continue to rise, supply is worryingly low.

“All of these factors combined have the potential to create a perfect storm in which the market overheats and many potential buyers are unable to join or move up the housing ladder.

“To solve this problem and alleviate market stress, we need sustained supply growth over the long term.”

The best mortgage rates and how to find them

Mortgage rates have risen substantially as the Bank of England base rate has risen rapidly.

If you’re thinking about buying your first home, moving or remortgaging, or are a buy-to-let landlord, it’s important to get good, independent mortgage advice from a broker who can help you find the best deal.

To help our readers find the best mortgage, This is Money has partnered with independent broker L&C.

Our L&C-powered mortgage calculator can allow you to filter offers to see which ones best match your home value and deposit level.

You can also compare different fixed-rate mortgage durations, from two-year arrangements to five-year arrangements to ten-year arrangements, with monthly and total costs displayed.

Use the tool at the link below to compare the best deals, taking both fees and rates into account. You can also start an online application on your own time and save it as you go.

> Compare the best mortgage deals available now

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