Save, make, understand money

First-time Buyer

House prices grow by £24,000 in a year

Paloma Kubiak
Written By:
Paloma Kubiak

The average UK house price went up by 9.8% year-on-year to March 2022, adding £24,000 to house values.

The average UK house price was £278,000 in March 2022, up £24,000 from a year earlier.

Seasonally adjusted, this is a 0.6% increase between February and March 2022, following an increase of 0.9% in the previous month.

The seasonally adjusted estimate of residential transactions was 114,650, according to HMRC. This is 35.7% lower than March 2021 and 2.6% higher than February 2022.

Regional breakdown

Wales saw the greatest growth at 11.7% to £206,000. England skimmed the national average at 9.9% to £298,000; Scotland went up 8% to £181,000, and Northern Ireland saw a 10.4% growth to £165,000.

London continues to be the region with the lowest annual growth at 4.8% per cent year-on-year, yet remains the most expensive at an average house price of £524,000. The East Midlands saw the highest YoY change at 12.4%. The North East continues to have the most affordable average housing at £155,000.

Market analysis

While far from catastrophic, the figures indicate a market decline despite a continued imbalance in supply and demand.

Simon McCulloch, chief commercial and growth officer at Smoove, said: “There’s a clear dichotomy between rising prices, greater supply, and constrained affordability and we’ll see within the coming months if economic pressures test the market’s current trajectory.”

Emma Cox, manging director of real estate at Shawbrook, cites the impact of inflation and the cost-of-living crisis on consumer confidence as a causal factor for the slowdown.

She said: “It’s likely that many will pause their property plans. However, for now the property market remains in good stead. Demand continues to be high, outweighing supply, and leading to competitive bidding wars that are pushing prices up further.

“More quality supply is clearly needed, but with the cost of material and labour on the rise, new properties are likely to continue to edge prices further up.”

Energy Performance Certificate proposals and energy costs will also impact first time buyers, tenants, and landlords.

Cox added: “Tenants have started to look for properties with bills included to mitigate any future rises.”

The housing costs aren’t going to be getting any cheaper according to Anna Clare Harper, director of real estate technology platform IMMO, who cites The Construction Leadership Council’s report that material prices are up 20% this year.

“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,” she said.

However, lenders’ are still “keen to lend” according to Mark Harris, chief executive of mortgage broker SPF Private Clients, with “a number are making tweaks to criteria” to offset affordability issues.

He said: “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.

“For example, Nationwide raising its loan-to-income cap on like-for-like remortgages, while still ensuring they are lending in a responsible way.”

Abnormal ONS stats

The ONS stated that there may be increased volatility and larger revisions to the HPI than usual due to the impact of the pandemic. March 2022’s data is also abnormal as the stamp duty tax breaks were originally due to conclude at the end of March 2021, so “it is likely that March’s average house prices were slightly inflated as buyers rushed to ensure their house purchases were scheduled to complete ahead of this deadline.”