Average UK house price hits record high of GBP286,000 but market to ‘come back down to earth’ as cost of living soars

According to the Halifax House Price Index, the average house cost in the UK rose by GBP47,000. However, the cost of living and rising interest rates have caused the market to slow down. This is the tenth consecutive monthly increase, the longest streak of increases since 2016. However, the pace of growth is slowing down, with April’s increase lower than March’s 1.4%. Halifax predicted that the average home would reach GBP300,000. However, the lender stated that this is unlikely given rising interest rates and the cost-of-living crisis. Prices are up 6.2% year-on-year at the current rate of growth. The average property value in London is still much higher than elsewhere in the country. However, Russell Galley, Halifax’s managing director, stated that the current imbalance between supply and demand is still driving up prices. He also said that the “headwinds” facing wider economies will likely have an impact upon house prices by the end. “The house price to income ratio has reached its highest level ever, and with inflation on the rise, it is likely that house prices will slow down by the end of the year. READ MOREMortgages Bank of England raises interest rate to 1% – here’s what it means.Supply squeeze – aspiring buyers believe that lack of homes for sale is more important than high prices. The Bank of England raises rates and warns of a recession. Tom Bill, head of UK residential research at Knight Frank, stated: “We appear have reached the summit of this recent period of UK house prices growth. Although we don’t expect prices falling, we are likely in the last month or so of double-digit annual growth. The psychological effects of a rising base rate of above 1 percent, higher mortgage rates and a cost-of living squeeze will all contribute to the slowdown in house prices coming back down to earth later in the year. “The Bank of England raised interest rates to their highest level in 13 year on Thursday. The Bank of England raised interest rates by 0.25 percent on Thursday. This triggered an immediate increase in housing costs and higher monthly payments for approximately one in four homeowners with tracker, discounted, or variable rate mortgages. Inflation, higher energy bills, and the rising cost of living are starting to affect households. They are cutting back on essentials. This trend will only get worse if interest rates rise. The interest rate increase this week could add GBP340.56 annually to mortgage payments. According to Alifax, the data shows that buyers are more interested in larger homes than flats. The price of detached and semi detached properties has risen by 12% annually, compared to flats’ 7.1%. Tomer Aboody, director at MT Finance, stated: “The trend and desire of buyers for more space has never been clearer with detached properties increasing in worth five times as much than flats. This is due to low interest rates, where buyers are pushing themselves to purchase their dream homes, which may become increasingly difficult with rising inflation and higher interest rates.