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UK house prices and rents remain at record high

·4-min read
UK average house prices increased by 9.8% over the year to March, the ONS said. Photo: Getty
UK average house prices increased by 9.8% over the year to March, the ONS said. Photo: Getty

The average UK house price came in at £278,000 in March 2022 – £24,000 higher than the same time last year, according to new figures from the Office for National Statistics (ONS).

UK average house prices increased by 9.8% over the year to March, the ONS said.

House price growth began accelerating in the second half of 2020, with the trend continuing into 2021 and remaining strong since the start of 2022. The average house price of £278,000 remained unchanged from the record level seen in February.

Average house price, UK, January 2005 to March 2022. Chart: ONS
Average house price, UK, January 2005 to March 2022. Chart: ONS

Myron Jobson, senior personal finance analyst, Interactive Investor, said: “A slowdown in house price growth could be a sign of things to come as the cost of living crisis bites.

"Those who have been priced out of the property market because of runaway house prices will hope the slowdown will ultimately lead to a fall in prices. When is anyone’s guess, but for the moment, house price growth remains strong amid robust demand and low supply."

House prices in Wales saw the greatest rate of growth in the year to March, rising 11.7% to £206,000.

Read more: UK inflation is nearly 11% for poorest households, think tanks say

House prices in England increased by 9.9% to hit £298,000, while Scotland saw an 8% rise with average prices of £181,000.

The average house price in Northern Ireland increased by 10.4% over the year to Q1 of 2022. Northern Ireland remains the cheapest UK country to buy property, with the average house price at £165,000, according to the ONS.

Regionally, the East Midlands was the region with the highest annual house price growth, with average prices increasing by 12.4% in the year to March.

Average house price, by English region, January 2005 to March 2022. Chart: ONS
Average house price, by English region, January 2005 to March 2022. Chart: ONS

The lowest annual house price growth was in London, with average prices in the capital rising by 4.8%. Despite this, London remained the most expensive region in the UK to buy property, with an average price of £524,000 in March.

The North East continued to have the lowest average house price at £155,000.

Private rental prices paid by tenants in the UK rose by 2.7% in the 12 months to April 2022 – up from 2.4% in the year to March.

Private rental prices in London rose by 1.1% in the year to April, up from an increase of 0.4% in March. This was the strongest annual growth in the UK capital since November 2020.

However, London’s rental price growth in April was the lowest of any of the English regions. This may be down to a continued fall in demand due to the coronavirus pandemic and remote working shifting housing preferences to mean employees no longer need to be close to offices, the ONS said

Read more: Petrol and diesel prices: pass on fuel duty cut to customers, retailers told

The East Midlands saw the greatest rental price growth at 4%, followed by the East of England and the South West which both experienced an increase of 3.7%.

"There are still plenty of signs of strength in the market that have come through since March, with sales remaining brisk, mortgage approvals running above pre-pandemic levels, and the number of buyers still growing – and continuing to dramatically outnumber sellers," said Sarah Coles, senior personal finance analyst, Hargreaves Lansdown.

"Zoopla figures out yesterday also show rents rising an astonishing 11% in a year, helping to fuel demand from first-time buyers determined to escape the rent trap.

"However, it’s only a matter of time before we see house prices slow on a more sustained basis. The latest RICS report showed that the number of buyers continued to rise, but that they were getting a bit more cautious.

"Even if they’re still keen to buy, mortgage companies are increasing rates and boosting the assumed costs in their affordability calculations, so there’s going to come a time when it gets harder for people to get a loan."

Jobson said: “Low mortgage rates and higher wages helped offset house price growth in the not-so-distant past, but as property prices continue rise – albeit at a slower pace – and with mortgage rates also on the up, consumers are going to struggle to find a property they can comfortably afford.

“Mortgage affordability is becoming a growing thorn in prospective buyers’ side. Mortgage rates have climbed to levels we haven’t seen in a while and will continue to do so with further rises in interest rates on the horizon.

“Prospective homebuyers’ attempts to stretch their budgets 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. Many first time buyers will have little option but to give up on their dream of homeownership for the time being.

Watch: Will UK house prices ever fall?

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