UK house prices hit a new record high in May, but the property market may be starting to cool, new data from Halifax shows.
Across the country, the typical property value increased by £2,857 month on month in May - to £289,099. An imbalance between supply and demand for housing remains the primary reason behind the climb, the report added.
Northern Ireland had the strongest annual house price inflation in May, seeing prices rise by 15.2% to £185,386, followed by South West England where prices jumped 14.5% to £305,173. In Wales, house prices jumped by 13.7% annually, pushing the average house price there to a record £216,120.
Only Yorkshire and the Humber, Scotland and London recorded annual house price inflation below 10% in May. In Scotland, house price growth continued to “underperform” relative to the UK average, according to Halifax, with annual inflation at 8.3%.
Russell Galley, Halifax managing director, said: "Compared to May last year, you’d need around £10,000 more to buy a flat, but an additional £50,000 for a detached home. This clearly creates a knock-on effect for those looking to make their first home move, as the rungs on the housing ladder have become increasingly wider.
“However, the housing market has begun to show signs of cooling. Mortgage activity has started to come down and, coupled with the inflationary pressures currently exerted on household budgets, it’s likely activity will start to slow.
“So, there is perhaps one green shoot for prospective purchasers – with overall buying demand down compared to last year, we may be past the peak sellers’ market.”
A decade ago, annual house price growth in London was the strongest in the UK, with annual house price inflation of 4%. Southern England was at that time leading a recovery in property prices following the tough economy of 2008 and 2009.
Over the past 10 years, the cost of a home generally has risen by 74%, or £123,016, Halifax said. The strongest inflation over that period has been in London (84.2%), followed by the east of England (84.0%) and the East Midlands (82.1%).
Nicky Stevenson, managing director at estate agent group Fine & Country, said: “In this uncertain economic climate, there is a sense that the housing market is at a crossroads, with future gains unlikely to match the huge spikes recorded over the last 12 months.
“While there remains a strong appetite among existing homeowners to trade up, the supply crunch which has driven record growth in the recent past is slowly starting to ease. As the imbalance between supply and demand continues to narrow, annual gains are expected to soften further in the months ahead.”
Average house prices in May and annual increase, according to Halifax
– East Midlands, £239,859, 12.3%
– Eastern England, £337,216, 11.6%
– London, £541,942, 6.3%
– North East, £166,449, 10.6%
– North West, £219,849, 10.6%
– Northern Ireland, £185,386, 15.2%
– Scotland, £198,288, 8.3%
– South East, £391,845, 11.4%
– South West, £305,173, 14.5%
– Wales, £216,120, 13.7%
– West Midlands, £244,071, 10.6%
– Yorkshire and Humber, £200,469, 9.5%
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