Rising house prices continue to fuel UK property boom

·Business Reporter, Yahoo Finance UK
·4-min read
Colourful houses in Notting Hill, west London. London house prices grew 8.2% in May
London continued to be the region with the lowest annual growth at 8.2%, up from 6.9% in April, although house prices in the capital are continuing to accelerate. Photo: Matt Crossick/Empics

UK house prices rose by 12.8% in May, up from 11.9% the month before, fuelling Britain’s property boom.

According to the latest figures from the Office for National Statistics (ONS) on Wednesday, the average UK house price came in at £283,000 ($340,385) during the month, which was £32,000 higher than the same time last year.

Average house prices increased over the year in England to £302,000 (13.1%), in Wales to £212,000 (14.4%), in Scotland to £188,000 (11.2%) and in Northern Ireland to £165,000 (10.4%).

The South West was the region with the highest annual house price growth, with average prices increasing by 16.9% in the year to May 2022. This was up from a growth rate of 14.7% in April 2022.

London continued to be the region with the lowest annual growth at 8.2%, up from 6.9% in April, although prices in the capital are continuing to accelerate.

The ONS house price inflation figures are calculated using data from HM Land Registry, Registers of Scotland, and Land and Property Services Northern Ireland.

UK house prices continued to rise during May 2022. Chart: ONS
UK house prices continued to rise during May 2022. Chart: ONS

Despite being the region with the lowest annual growth, London's average house prices remain the most expensive of any region in the UK, with an average price of £526,000 in May 2022.

The North East continued to have the lowest average house price at £154,000.

It comes as the latter half of 2020 saw the UK's average house price growth accelerating. This trend continued into 2021, and house price growth has remained strong since the start of 2022.

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Meanwhile, rents continued to grow across the country, with the East Midlands seeing the biggest rises.

London was again lowest, though its rate of increase continued to climb, ONS house prices statistician Ceri Lewis said.

Private rental prices paid by tenants in the UK rose by 3% in the 12 months to June, up from 2.8% in the 12 months to May 2022, while private rental prices grew by 2.9% in England, 1.9% in Wales and 3.5% in Scotland over the year.

The East Midlands saw the highest annual growth in private rental prices (4.3%), while London saw the lowest (1.7%).

“Whilst many expected to see a slowdown in house price growth as we moved into the latter months of 2022, this month’s data has exceeded any expectations of a housing market slowdown, as house price growth continues to rise strongly,” Stuart Law, chief executive of the Assetz Group, said.

“As we move into summer months, it is likely this growth will continue as housing purchases naturally increase at this time of year, inevitably pushing prices up further. In fact, I expect we will see strength in house prices lasting until the end of 2022, if not longer.”

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He added: “We are still feeling the impact of the pandemic as demand, characterised by the race for space, continues to push up house prices, particularly in rural areas. We are also seeing Brexit and the pandemic having a continued impact on supply chains, construction costs and labour shortages, further increasing pricing.

"Rising interest rates and high inflation levels are beginning to have some impact on moderating the excess demand for housing versus supply, but not anywhere near enough impact yet to tip the balance, which would lead to falling prices.

“However, whilst demand is still high and prices continue to increase, supply is at worryingly low levels. All these factors combined have the potential to create a perfect storm where the market overheats and many potential buyers are priced out of joining the housing ladder, or are unable to move up it. To solve this issue and take heat out of the market, we need sustained growth in supply over the long term.”

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