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Monthly house price growth at lowest level since 2019

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Written by: Su Fowler
01/07/2022
Average property prices rose just 0.1% in May – the lowest rate of monthly growth since December 2019, according to Zoopla's index.

In total average prices are up 8.4% on the year, down from 9.2% in April. This takes the average UK house price to £251,550, according to Zoopla’s UK house price index for May.

On a quarterly basis, the 1.4% rise was also the slowest rate in 15 months.

Gráinne Gilmore, head of research at Zoopla, said that while buyer demand remained strong, “signals are emerging that the impetus may be easing.”

She said: “There are many factors supporting the price growth seen since the start of the pandemic, not least the continued imbalance between demand and supply.

“But the increasing cost of living, increasing mortgage rates for buyers and cloudier economic outlook will act as a brake on house price growth through the rest of the year.”

She added that the level of buyer demand in the market, while still high compared to the five-year average, is beginning to recede to more normal levels.

Continuing a trend, London showed the slowest price growth in the UK in May, with prices averaging 3.9% higher on the year, adding nearly £30,000 to the average home price over the past 24 months to £516,100.

Zoopla’s report revealed that the market in the South West – where the average property took just 19 days from a listing to an accepted offer – remained the most buoyant thanks in part to the availability of housing stock in areas such as Bristol, South Gloucestershire, Plymouth, Swindon and Exeter.

Nick Leeming, chairman of the estate agent Jackson-Stops, said: “It’s unsurprising to see the South West market going against the cooling tide. Our Exeter office saw a near 40% uplift in buyer enquiries in May, heavily outpacing the level of instructions there. This allowed some sellers to be more bullish in their requests – pushing up competitive bids and testing the agility of buyers for a quick move.

In contrast, London was the UK’s slowest market with properties taking an average of 35 days to sell, though that was still faster than the 50-day five-year average for May.

Among the largest cities, Nottingham registered the highest price growth at 10.4%, lifting the average home value to £190,300.

Rising inflation continued to affect the cost of borrowing, as the Bank of England has been raising its base rate to temper this. Buyers now face average rates of 3.37% for a five-year fixed-rate home loan as opposed to a rate of 2.64% in December on a £250,000 loan, Zoopla said, raising the annual cost of a loan by more than £870.

Q1 2022 ‘pinnacle of post-pandemic related enthusiasm’

Gilmore said: “Those who want to make a move should investigate their options sooner rather than later. In addition, mortgage rates are likely to continue to climb, so locking into a rate shortly could save hundreds over the longer-term.”

Leeming added: “The slower pace of growth overall is a sign that economic headwinds are coming down the tracks. I think we’ll look back and note the first quarter of 2022 as the absolute pinnacle of post-pandemic related enthusiasm, with an incredible amount of pent-up momentum. But the trampling on shoulders amongst buyers that we’ve seen is unlikely to sustain.

He said the market was “already seeing many over-ambitious sellers coming back down to the realms of reality.

“The housing market frenzy has a chill in its spine, but not enough to curb continuing incremental growth entirely this year thanks to the laws of supply and demand. The summer market will likely be characteristic of a steadier future, as residential property data is fairly slow moving against wider economic risks. What we are seeing is more supply coming to the market in most regions, partly in the belief that house prices are peaking, but also to lock in the best mortgage rates as the era of ultra-cheap money comes to an end,” he added.

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