UK house prices reach new record but cost of living crisis threatens growth
UK house prices reached a record high in January according to Halifax, but the lender warned growth is likely to slow “considerably” this year as household finances come under increasing pressure.
The price of the average UK home reached a record high of £276,759 in January, up £24,500 over the year, and £37,500 higher than two years ago. However, house price growth slowed to just 0.3% in January, the smallest monthly increase since June last year, in a sign that the pandemic-fuelled boom could be fading.
“While the limited supply of new housing stock to the market will continue to provide some support to house prices, it remains likely that the rate of house price growth will slow considerably over the next year,” said Russell Galley, a managing director at Halifax.
Halifax, which has previously said that the housing market “defied expectations” last year, said affordability remains at historically low levels as price rises continue to outstrip growth in earnings.
Last week, the Bank of England raised interest rates for the second time in three months, as it sought to temper inflation, which is running at a 30-year high of 5.4%, with analysts expecting further rises later this year.
Homeowners are also facing a dramatic increase in living costs, including higher energy and food bills, rising phone and broadband charges, and increased national insurance payments from April.
“This situation is expected to become more acute in the short term as household budgets face even greater pressure from an increase in the cost of living and rising interest rates begin to feed through to mortgage rates,” said Galley. “Despite record levels of first-time buyers stepping on to the ladder last year, younger generations still face significant
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