House price adverts in an estate agent window
(Picture: PA)Affordability of housing in the UK is “extremely stretched”, experts have warned, as the cost of living squeeze threatens to push homeownership further out of reach.
Monthly house price growth across the UK was 1.4%, according to the latest Halifax House Price Index, the biggest increase for six months.
It brings the average property price to a new record high of £282,753. In London, the average house price reached almost £535,00.
Russell Galley, managing director at Halifax, said that limited supply and strong demand was continuing to drive prices higher, despite the increasing pressure on household finances.
“Buyers are dealing with the prospect of higher interest rates and a higher cost of living,” he said. “With affordability metrics already extremely stretched, these factors should lead to a slowdown in house price inflation over the next year.”
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “Housing affordability is a growing concern for would-be buyers.
“It is largely dependent on three factors: house prices, household income and mortgage interest rates. All three have been rising, but the two that reduce affordability (house prices and mortgage rates) combined outstrip growth in household income - the area that increases affordability.”
The South West of England overtook Wales as the UK’s strongest performer in terms of annual price house inflation, now up to 14.6%, its highest rate of annual increase since September 2004. In the South East house price growth was at 11.6% and an average price of £385,790.
The coronavirus pandemic has also impacted demand for different property types.
With buyers now placing a premium on properties offering greater space - both inside and out - average prices for detached properties have leapt by 21.3%, or £77,717, over the last two years, compared to 10.6% or £15,404 for flats.
