UK house prices hit record £289,099 but market set to cool - YAHOO FINANCE
UK house prices rose for an 11th month in a row and hit a new record high of £289,099 in May, but the market is showing signs of cooling.
Across the UK, the typical property value increased by £2,857 month-on-month in May, according to mortgage lender Halifax.
Prices rose by 10.5% compared with May last year, down from April's 10.8% increase to show the smallest increase since January.
Prices rose in monthly terms for an 11th consecutive month, up by 1% in May after a 1.2% increase in April.
An imbalance between supply and demand for properties remains the primary factor driving the climb in house prices, the Halifax said.
Russell Galley, managing director, Halifax, 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 11 consecutive months.
This content is not available due to your privacy preferences. Update your settings here to see it.
“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.
“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.”
The strongest inflation over the past decade has been in London (84.2%), followed by the East of England (84%) and the East Midlands (82.1%).
In cash terms, London house-hunters need £247,638 more than those looking 10 years ago, whereas those in the East of England need £153,930 and those in the East Midlands would typically need an extra £108,116.
Overall, nine regions of the UK registered double-digit annual inflation, with only Yorkshire and the Humber, Scotland and London in single figures.
Northern Ireland had the strongest annual house price inflation in May, seeing prices rise by 15.2%.
The South West of England also recorded a strong rate of annual growth at 14.5%.
In Wales, house prices jumped by 13.7% annually, pushing the average house price there to a record £216,120.
Over the past decade, the average cost of a home in the UK has risen by 74%, or £123,016.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “The balance of power between property buyers and sellers has started to shift, so we’ve seen price rises slow again in May.
“However, with so many pressures from all sides sapping their energy, buyers may be too weak to take advantage of this opportunity.
“Sellers have had all the power in the relationship for almost two years, because so many buyers flooded into the market and discovered there was almost nothing for sale. It has pushed prices skywards as bidding wars erupted around the UK. There’s still very little for sale, which has kept prices rising, but the balance has started to shift.”
Alice Haine, personal finance analyst at Bestinvest, said: “With mortgage rates surging — following four consecutive interest rate rises from the Bank of England since December and further hikes expected this year — and inflation of 9% eating into real incomes, it’s only natural that prospective buyers may take a pause before plunging into the market right now.
“Add in the cost of living crisis and the fact fuel prices are now at record highs (petrol prices set a new average record of 178.5p per litre on Tuesday), and the cost of buying a home may deter those already struggling to meet their monthly obligations.”
Myron Jobson, senior personal finance analyst at Interactive Investor, said: "Prospective homebuyers’ attempts to build up an ample cash pot to purchase a property is increasingly being thwarted by the cost of living crisis, with inflation surging to 9% in April and expected to reach double digits before the end of the year.
“The worry is high home prices and affordability pressures could result in buyers getting in over their heads just to get on the property ladder.
“Those who have been priced out of the property market will hope the slowdown will ultimately lead to a fall in prices. Rising borrowing costs coupled with more housing inventory could result in slower home price growth, but it could be some time before we see declines in prices.”