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House prices jump to £286,000 in June but UK property market is cooling

·Finance Reporter, Yahoo Finance UK
·3-min read
house price LONDON, UNITED KINGDOM - 2022/03/08: A For Sale estate agent board sign erected outside a property in London.According to Halifax, UK house prices annually rose to 10.8 per cent making it the highest figure since June 2007. (Photo by Dinendra Haria/SOPA Images/LightRocket via Getty Images)
UK house price growth slowed sharply to 7.8% in June. Photo: Dinendra Haria/SOPA Images/LightRocket via Getty

The average UK house price came with a £286,000 price tag in June, with the 7.8% increase over the year to June representing a sharp slowdown.

The Office for National Statistics (ONS) said the average house price was £286,000 in June, representing a £20,000 increase against the same month last year.

In England, average house prices increased by 7.3% to £305,000 over the year.

In Wales, the average prices grew 8.6% to £213,000, while in Scotland prices rose 11.6% to £192,000 and in Northern Ireland, they rose 9.6% to £169,000.

ONS house prices statistician Ceri Lewis said: “While annual growth slowed, house prices continue to increase and average prices have now reached record levels in England, Wales and Scotland."

Read more: UK inflation hits 10.1% as food prices hit 40-year high

The East of England was the region with the highest annual house price growth, with average prices increasing by 9.7% over the year, down from a growth rate of 14.5% in May.

Private rents paid by tenants in the UK increased by 3.2% in the 12 months to July 2022, the fastest annual growth rate since this series began in January 2016.

“Rents continue to climb across the country, with sustained pick-up in London which saw its strongest growth since the beginning of 2017,” Lewis said.

June's increase represented a sharp slowdown from May's 12.8% annual jump in prices.

“The UK economy is sailing head on into some very stormy seas at present, all while the captain remains on shore leave with no replacement yet to take the helm,” Marc von Grundherr, director of Benham and Reeves, said.

Read more: UK house prices fall in August as property market cools in summer

“But despite this, the boat is yet to rock where the property market is concerned and the economic woes of rising inflation, increasing interest rates, and a cost of living crisis continue to bounce off the hull like mere pebbles rather than unforeseen ice bergs.

“It’s inevitable that the property market was eventually going to slow from the high rate of knots it’s been moving at throughout the pandemic, but we’re yet to see any signs of it sinking and this is likely to remain the case,” he added.

Charlotte Nixon, mortgage expert at Quilter, added: “(…) the market may pull back now as cheap mortgage deals are a thing of the past along with a cost of living crisis draining people’s funds.

“With energy prices soaring we may see very few people choose to move in autumn and winter. If housing stock then starts to accumulate prices will be naturally driven down by the laws of supply and demand.

“The days of never ending house price rises may be drawing to a close.”

Read more: FTSE 100: Persimmon boosted by rising house prices as inflation eats into earnings

Despite house prices increasing between May and June for the eighth consecutive month, annual house price inflation slowed due to the rise in prices seen in June 2021, which were the result of tax break changes.

The ONS said that the temporary changes to stamp duty, and land transaction tax last year may have allowed sellers to request higher prices as buyers’ overall costs were reduced.

Watch: Will UK house prices ever fall?