The property market continues to defy gravity with a tenth successive monthly house price rise
(Picture: Daniel Lynch)The bouyant property market continues to defy gravity despite four interest rate rises from the Bank of England since December, latest figures show today.
Building society Nationwide, one of Britain’s biggest mortgage lenders, said the average price of home in the UK rose 0.9 per cent in May — the tenth successive monthly rise — to £269,914.
The annual rate of increase eased slightly from 12.1 per cent to 11.2 per cent but shows no sign of a dramatic slowdown.
Robert Gardner, Nationwide’s chief economist, said: “Despite growing head-winds from the squeeze on household budgets due to high inflation and a steady in-crease in borrowing costs, the housing market has retained a surprising amount of momentum.
“Demand is being supported by strong labour market conditions, where the unemployment rate has fallen towards 50-year lows, and with the number of job vacancies at a record high. At the same time, the stock of homes on the market has remained low, keeping upward pressure on house prices.”
The lender said it expected the market to start slowing later in the year as double digit inflation increases the squeeze on household finances. further interest rate hikes are also expected over the coming months.
But property commentators described the continuing strength of the market as “absurd” and warned that it could come to be seen as “the calm before the storm.”
Tomer Aboody, director of property lender MT Finance, said: “Although there’s a definite squeeze on people’s purses due to the higher cost of living and inflation across the board, we are still seeing a strong housing market with higher prices supported by low interest rates, even though these are rising, and strong employment.
“With homeowners looking to improve their homes, disposal income is being used intelligently to add value and improve quality of life. This will be something to watch closely in coming months with higher costs of such works and inflation hitting homeowner budgets.”
Anna Clare Harper, director of property technology platform IMMO, said: “Many will be wondering why house prices remain so buoyant, in the context of post-Covid, post-Brexit and mid-Ukraine turmoil.
‘Much like for the wider economy, house price inflation is being driven by shortages of supply. This shortage relates to housing in general, and to quality housing that people can afford, in the places they want and need to live, in particular.
“Suitable, affordable housing shortages are being made worse by planning backlogs from lockdown alongside labour and material shortages and inflationary pressures, alongside the fact that many new build schemes are unaffordable to locals.’
