House price growth at 9.8% in March: UK HPI

Property Reporter
18th May 2022
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UK average house prices increased by 9.8% over the year to March 2022, down from 11.3% in February 2022, according to the latest ONS House Price Index.

According to the data, average UK house prices during March hit £278,000 - a £24,000 rise against March 2021. A regional breakdown shows that average house prices increased over the year in England to £298,000 (9.9%), in Wales to £206,000 (11.7%), in Scotland to £181,000 (8.0%) and in Northern Ireland to £165,000 (10.4%).

On a non-seasonally adjusted basis, average house prices in the UK increased by 0.3% between February and March 2022, down from 1.6% during the same period a year earlier (February and March 2021).

On a seasonally adjusted basis, average house prices in the UK increased by 0.6% between February and March 2022, following an increase of 0.9% in the previous month.

The East Midlands was the region with the highest annual house price growth, with average prices increasing by 12.4% in the year to March 2022. This was up from a growth rate of 11.6% in February 2022.

The lowest annual house price growth was in London, where average prices increased by 4.8% over the year to March 2022, down from 7.8% in February 2022.

Despite being the region with the lowest annual growth, London’s average house prices remain the most expensive of any region in the UK, with an average price of £524,000 in March 2022.

The North-East continued to have the lowest average house price at £155,000.

Anna Clare Harper, director of real estate technology platform IMMO, says: "With UK HPI data showing annual house price growth of 9.8 per cent to £278,436, many wonder 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.

"The shortage of suitable, affordable housing is being made worse by planning backlogs from lockdown alongside labour and material shortages and inflationary pressures, as well as the fact that many new-build schemes are unaffordable to local people. Construction material prices rose by over 20 per cent (including 10 to15 per cent inflation in the first quarter of this year according to The Construction Leadership Council). So, the trend is unlikely to reverse any time soon.

"The result is an ongoing and growing constraint on the affordability of homeownership. In England, full-time employees could expect to spend 9.1 times their annual earnings on purchasing a home in 2021, and this figure is not improving with the latest HPI data highlighting that house price growth continues to outpace wage growth.

"This rate of inflation increases the importance of the Private Rental Sector, which is essential for providing safe, quality housing to millions of people and families for whom homeownership is not the right path to follow.

"This is a major reason why we are seeing growing appetite from investors such as pension funds, which increasingly realise they play a major role in plugging the gap in quality, affordable homes for people and communities across the UK."

Melanie Spencer, head of finova Payment and Mortgage Services at finova, comments: “A lack of sufficient housing supply has continued to drive up property prices in March. Yet, in the coming months, we can expect homebuying activity in the market to slow as surging inflation and the ongoing cost of living crisis continue to dent people’s savings and leave their finances stretched.

“Following a record-breaking two years, brokers will now be feeling challenged in new areas as they support clients facing financial difficulty. For first-time buyers and movers attempting to navigate the property ladder, rising bills paired with higher interest rates may set back their housing plans, while others will need support with remortgaging.

“During what will still be a busy time, mortgage clubs will be on hand to support stretched brokers with market-leading technology designed to automate tasks. This will help them keep on top of their workloads and give them more time to support their clients who are in need.”

Alex Lyle, director of Richmond estate agency Antony Roberts, says: "The imbalance between supply and demand continues to fuel strong house price growth in Richmond. The £1.5 million-plus freehold house market has been well received this year, with any sensibly priced family home attracting interest from a number of buyers, resulting in multiple bids and an agreed sale in excess of the guide price.

"Below that threshold, it’s a more typical market. Good addresses sell well, while compromised or overpriced homes tend to stick. The now-regular increases in interest rates and rise in living costs have yet to make any significant impact but there might be signs of things slowing. The historical pick-up in supply after Easter has yet to materialise and this reduction in choice, plus increasing financial pressures, may see some buyers step back.’

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "With inflation hitting 9 per cent, cost of living increases alongside rising base and mortgage rates is causing concern around affordability and borrowing potential, as well as the potential knock-on effect to house prices.

"Lenders remain keen to lend with a number making tweaks to criteria to enable this to happen, such as Nationwide raising its loan-to-income cap on like-for-like remortgages, while still ensuring they are lending in a responsible way.

"Mortgage rates remain competitive although they are on the rise. Borrowers need to move quickly to secure the best rates as they are often pulled at short notice."

Richard Pike, Phoebus Software sales and marketing director, says: “The headline figure from the ONS today is one that is no surprise to anyone.  We can all see how much prices are rising, almost at every turn.  When you drill down and see the effect housing and household services is having on the overall CPIH figures, which mainly is driven by the increasing price of electricity and gas since the cap was changed in April, you can see how this is hitting everyone right in the pocket. 

“When it comes to affordability there is one thing that people can fix the price of, and that’s a mortgage. In a world where inflation is spiralling, it makes sense to fix now and at least know there is one bill each month that will not be going up. This does mean that lenders will be under pressure to provide the longer-term fixes people are looking for, whilst also looking out for more vulnerable borrowers.”

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