UK house prices have risen 8.3% in the last 12 months, bringing the average home price to £256,600, according to Zoopla’s latest house price index. 

The latest figures show a slower rate of growth compared to March’s recent high of 9.6% year-on-year, however, Zoopla says prices are continuing to rise faster than the average annual rate over the last five years.

Demand has slowed in the last few months, however, data shows that it sits 25% above the five-year average and is on par with the same period last year. 

With the housing market proving more resilient than many expected, Zoopla predicts higher house price growth and more sales in 2022 than originally anticipated at the start of the year.

The UK is on track for 1.3m sales in 2022 with a house price growth of 5%. 

Zoopla’s data shows there are enough people who want to keep moving to support normal levels of activity in the market.

The latest data found that the most affordable housing markets continue to make the fastest price gains.

Average home values are rising the fastest in Wales, up 11.1% while double digits also remain in the South West and the East Midlands. 

In terms of the UK’s largest cities, Nottingham boasts the strongest housing market, with annual house price growth of 10.7%, while Bournemouth follows closely with a rise of 10.2% and Leeds, where it has increased by 9.3%.

Outside of the largest cities, homeowners in Wigan, Greater Manchester are coming out on top in house price growth with an average rise of 11.8% year-on-year. 

Meanwhile, homeowners in Mansfield have seen an 11.6% rise in their house price while house prices in Warrington are up 11.2%.

House price growth has been slowest in the areas where prices are already high.

London is the UK’s most unaffordable housing market, which Zoopla says is limiting further price gains with prices rising just 4% year-on-year.

That figure drops to just 3% in the highest value markets in the capital such as Westminster, Camden and Southwark.

Some of London’s suburbs are performing better, with house prices in Barking and Dagenham and Havering rising by more than 7% in 12 months.

Meanwhile, in Scotland, Aberdeen remains the only city that has experienced negative house price growth over the last 12 months, with house prices down by 1.6%.

While house prices went up 3.6% in the first six months of 2022, Zoopla suggests that figure is likely to increase to 5% by the end of the year, driven by continued demand. 

However, it explains that homeowners are not immune to the pending economic headwinds and there are signs that the recent strength of the market will weaken in the next few months.

Zoopla also expects to see a decrease in demand for homes in aspirational rural or coastal areas in the next few months.

House price growth has already started to slow at the Welsh/English border and Powys region compared to June last year.

Coastal areas including Truro in Cornwall, Torquay in Devon and Canterbury in Kent are also slowing down. Buyer demand in these areas is now tracking up to -16% below the five-year average.

Hargreaves Lansdown senior pensions and retirement analyst Helen Morrissey says: “Our love of property remains undimmed even in the face of a cost-of-living crisis that has given our finances a pounding in recent months. Demand remains high with Zoopla amending its forecast upwards on the number of sales expected by the end of the year.”

“The impact of the pandemic continues to be felt as the shift to flexible working makes people reconsider their living arrangements and maybe make the move to somewhere a bit further afield that is more affordable. The increase in people choosing to retire as a result of the pandemic is also fuelling activity and house prices growth remains well supported for the time being.”

“With more rate rises on the horizon it is likely people will start to consider whether now is the right time to move, especially as rising bills take large chunks out of our disposable income as we approach winter. The prospect of paying higher mortgage costs will probably be a step too far for many people which will dampen demand and house price growth towards the end of the year and the beginning of 2023.”

“Despite the outlook for weaker growth going forward a full-blown housing market crash looks very unlikely. Instead, the outlook is for a continued slowdown in the market.”