Double-digit house price rises in May, as market remains robust
House prices rose by 0.9% in May, increasing for the tenth month in a row, according to Nationwide.
The building society said that this represented annual house price growth of 11.2%, taking the average UK property price to £269,914.
Robert Gardner, Nationwide’s chief economist, said: “Despite growing headwinds from the squeeze on household budgets due to high inflation and a steady increase in borrowing costs, the housing market has retained a surprising amount of momentum.
“Demand is being supported by strong labour market conditions, where the unemployment rate has fallen towards 50-year lows, and with the number of job vacancies at a record high. At the same time, the stock of homes on the market has remained low, keeping upward pressure on house prices.”
But Gardner admitted that the housing market was expected to slow over the year. He said: “Household finances are likely to remain under pressure with inflation set to reach double digits in the coming quarters if global energy prices remain high.
“Measures of consumer confidence have already fallen towards record lows. Moreover, the Bank of England is widely expected to raise interest rates further, which will also exert a cooling impact on the market if this feeds through to mortgage rates.”
Jonathan Hopper, CEO of Garrington Property Finders, agreed: “Behind the scenes there has been a decisive change. Where previously price growth was fuelled by a market brimming with confidence, today’s market is being fuelled by buyers’ desperation to find a home before interest rates rise further and the cost of living bites deeper.
“The current price momentum can only last so long in the face of rapidly weakening consumer confidence. With millions of Britons simultaneously grappling with surging fuel, energy and food prices, some will inevitably have to postpone or rethink their plans to buy a home.”