Average house prices could lift by a further 5% by the end of the year despite the cost of living crisis, according to Benham and Reeves.

The estate agent says this will add a further £14,320 to the average UK property bringing it up to £300,717. 

The current average cost of a home lifted 7.8% to £286,397 in the year to June, according to the latest Halifax house price data released earlier this month.

House prices continue to climb even as the Bank of England lifted interest rates by 50 basis points to 1.75% earlier this month, its biggest hike since 1995, which raised the base rate to a fresh 40-year high. It was the sixth rate rise since last December.

The move by the central bank comes as it battles rising inflation, which stood at 9.4% in June, which the BoE forecasts will hit 13% by the end of the year.

However, the estate agent’s report estimates that homes in London will see the biggest price increase across the rest of the year and will see a boost of £26,896 will bring the year-end average to £564,816, having started the year at £518,028.

The London borough to see the biggest price increase will be Kensington & Chelsea, with prices rising by £68,103, followed by Westminster, rising by £47,222, the City of London, rising by £41,519, and Camden, rising by £41,493.

Outside the capital, the South East will finish the year with the biggest increase with a £19,526, boost bringing the average price to £410,039. The increase in the East of England will be £17,724, followed by the South West, rising by £16,116, the West Midlands, rising by £12,306, and the East Midlands, rising by £12,296.

The smallest end-of-year price increases are expected in the North East, where prices will lift by £7,896, Northern Ireland rising by £8,453 and Scotland, rising by £9,612.

Benham and Reeves director Marc von Grundherr says: “We keep waiting for house prices to plateau, but it’s just not happening. The pandemic-inspired boom in demand and value has supercharged the housing market to such an extent that it seems even a cost of living crisis and soaring interest rates can’t stop it in its tracks.

“So much so that house prices are likely to keep on climbing as the year plays out and in some areas, this will equate to quite a significant increase in property values.

“As for if and when prices will finally fall – it’s hard to predict. But if this coming winter is going to be as tough as most are suggesting it will be, we might find that moving home is pushed to the very bottom of most people’s to-do lists and property values might, therefore, start to decline.”