Annual house price growth at fastest pace since 2007: Halifax

Property Reporter
7th March 2022
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House prices are rising at the fastest annual pace of growth since 2007 and reached a new record high of £278,123 in February, according to this morning's data released by Halifax.

Figures from Halifax show that, following a slower start to the year, house price growth gained an additional +0.5% in February and now stands at 10.8% - the strongest level since June 2007 (+11.9%).

Seven UK areas are now seeing double-digit annual house price inflation, highlighting not only the strength but the breadth of gains across the country.

Wales was once again the strongest performing nation or region, with annual house price growth of 13.8%, largely unchanged since January, with the average property price rising to £207,184.

The South West of England also continues to record big gains. Annual house price inflation is now up to 13.4%, with by far the strongest quarterly growth (3.5%) of any region (average house price of £293,968).

While there will be a variety of local factors influencing the strength of these respective housing markets, it’s notable that both areas benefit from greater availability of more rural, scenic living which has proven to be so popular amongst buyers throughout the pandemic.

Elsewhere Northern Ireland also continues to record strong price growth, with prices up 13.1% on this time last year, giving an average property value in February of £173,911.

House price growth remains robust in Scotland too. That said, despite the annual rate of house price growth picking up to 9.2%, remarkably Scotland now has the ‘weakest’ rate of annual growth of any area outside of London, again testament to the strength of house prices right across the UK. The average property price edged up to £193,777 in February.

As indicated above London remains the weakest performing area of the UK, though the capital continued its recent upward trend with annual house price inflation now standing at 5.4%, its strongest level since the end of 2020.

Russell Galley, Managing Director, Halifax, said: “The UK housing market shrugged off a slightly slower start to the year with average property prices rising by another 0.5% in February, or £1,478 in cash terms. This was an eighth successive month of house price growth, as the resilience which has typified the market throughout the pandemic shows little sign of easing. Year-on-year prices grew by 10.8%, the fastest pace of annual growth since June 2007, pushing the average house price up to another record high of £278,123.

“Two years on from the start of the pandemic, average property values have now risen by £38,709 (+16%) since February 2020. Over the last 12 months alone, house prices have gained on average £27,215. This is the biggest one-year cash rise recorded in over 39 years of index history.

“Lack of supply continues to underpin rising house prices, with recent industry surveys showing a dearth of new properties being listed, now a long-term trend. This may be a particular issue at the larger end of the property market. Over the past year, the average price of detached properties (£43,251, +11%) has risen at a rate more than four times that of flats (£10,462, +7%) in cash terms.

“Looking ahead, as Covid moves into an endemic phase and almost all domestic restrictions are removed, geopolitical events expose the UK to new sources of uncertainty. The war in Ukraine is a human tragedy but is also likely to have effects on confidence, trade and global supply chains.

“Surging oil and gas prices are one immediate consequence, meaning that inflation in the UK – already at a 30-year peak – will remain higher for longer. This will add to the squeeze on already stretched household incomes. While increases in Bank rates look likely in the near term, the extent of the rises will depend on how it affects prices and companies’ approaches to pay over the months to come.

“These factors are likely to weigh on buyer demand as the year progresses, with market activity likely to return to more normal levels and an easing of house price growth to be expected.”

Tomer Aboody, director of property lender MT Finance, says: "The biggest rise in house prices since 2007 is further proof of lack of supply, with buyers pushing themselves and stretching to their maximum borrowing capacity in order to secure their new home.

"Low-interest rates are fuelling and encouraging buyers to borrow before further rate increase come. With higher rates and cost of living on the rise, these could trigger a turn in the market in the near future.’

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "Prices may be continuing to rise to record levels but looking behind the numbers we are finding in our offices that this is more as a direct result of lack of choice, which is also compromising the number of transactions. Prices are unlikely to continue their mighty gains as affordability is becoming increasingly stretched, with events in Ukraine likely to send inflation and especially energy costs even higher."

Tom Bill, head of UK residential research, Knight Frank, said: “We are presumably witnessing the final few months of double-digit house price growth before supply picks up and demand loses some of its lustre. A lack of stock has been a feature of the UK property market since the stamp duty holiday ended last summer but the shelves are gradually re-stocking, helped by the arrival of the spring market. Meanwhile, higher inflation and rising mortgage rates will begin to put the brakes on sky-high demand. It won’t happen overnight but I would expect the return of single-digit house price growth later this year.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "With house prices continuing to rise, how big a mortgage a borrower can take on is a growing issue.

"Mortgage pricing remains incredibly dynamic, with lenders rapidly changing once they find themselves top dog, offering the most competitive products. Borrowers must move quickly to secure a rate even though expectations of an interest rate rise at the Bank’s next meeting are being pared back given the Russia/Ukraine conflict and its direct and indirect effects on the UK economy."

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