Updated: Jul 20
Interest rates are increasing, and quickly. The Bank Of England base rate now sits at 1.25%, with lenders increasing their rates as a consequence.
Despite record house price growth, many experts are calling a market cooling off in the months to come
This report looks into the data in more detail
UK House Price Index
The UK HPI is based on completed housing transactions. Typically, a house purchase can take 6 to 8 weeks to reach completion. Therefore, the price data feeding into this 2022 UK HPI will reflect sales agreed in April.
- Average Price UK £283,496- May 2022
- Annual Price Change 12.8% - May 2022
- Monthly Price Change 1.2% - May 2022
- London Average Price = £526,183 - May 2022
- London Annual Price Change = 8.2% - May 2022
- London Monthly Price Change = 0.2% - May 2022
HOUSE PRICES - HALIFAX HPI
The Halifax uses its own database of approximately 300,000 mortgage approvals per annum (ca. 25% of all mortgages) as a basis for its monthly house price reports. Because it uses approved loans rather than completed mortgages, the Halifax can obtain data earlier than the Land Registry
- Average Price: £294,845 - June 2022
- Annual Price Change: +13% - June 2022
- Monthly Price Change +1.8% - June 2022
TRANSACTIONS - UK House Price Index
The provisional seasonally adjusted estimate of UK residential transactions in April 2022 is 106,780, 12.1% lower than April 2022 and 3.9% lower than April 2022.
RENTAL INDEX MARKET (March 2022)
Data is gathered from our tenant referencing service, and our rental amounts are based on actual achieved rental prices with accurate tenancy start dates in a reported month, rather than advertised costs (HomeLet)
- Average rent in UK = £1,113
- Annual Variation for the UK = +10.5% (year on year)
- Average rent in London = £1,846
- Annual Variation for London = +14.9% (year on year)
- Household Rent To Income Ratio UK: 35% (single earner)
“The impacts of inflation, the war in Ukraine, energy price and other cost increases, are all combining to squeeze households up and down the country. This month’s rental figures also show a rise, and it is relatively easy to surmise that all of the issues above will lead to an increased number of tenants unable to pay their rent, which is a bad thing for everyone.” - Homelet
The average house price in the UK has increased by 16.8% since the start of the pandemic, according to Halifax. It now means that housing affordability is at the lowest level on the bank’s records.
The Bank of England’s (BoE) Monetary Policy Committee voted in favour of raising the base rate from 1.00% to 1.25% today. It means the base rate is now at its highest in over 13 years.
Price reductions for UK properties are on the rise, with one in 20 listed properties reducing their asking price by 5% or more in April to mid-May. By contrast, just one in 22 properties experienced this type of house price cut during the previous month, according to Zoopla
UK surveyors have reported a fall in buyer enquiries for May, indicating a fall in demand for housing, according to the Royal Institution of Chartered Surveyors (RICS).
Speaking to reporters during a trip to Madrid for the Nato summit last week, prime minister Boris Johnson said Downing Street was “certainly” looking at mortgages which could be passed from parents to children.
Reports have since suggested such mortgages could last up to 50 years.
Build to Rent new-build market share increases year on year - accounting for 34% of all new homes in London.
Mortgage Market News
Of those who remortgaged in May, nearly two-thirds of borrowers chose a five year product, according to the latest LMS Monthly Remortgage Snapshot. Compared to April, this figure has increased by almost 10%.
Compared to last month, total mortgage product availability has reduced by a notable 431 deals to leave 4,556 mortgage products on offer to borrowers this month. This is just 44 more deals than were available this time last year
The average overall two-year fixed rate has risen for a ninth consecutive month, and is now 1.40% above the same figure last December. It is now at its highest point in nine years.
The average Standard Variable Rate (SVR) for June reached 4.91% following a rise of 0.13% compared to last month’s equivalent rate, and of 0.51% since December 2021. This is now the highest we have recorded since February 2009
British lenders expect the biggest fall in demand for mortgages since mid-2020 during the three months to the end of August, a further sign that the housing market is cooling in the face of surging inflation.