Annual house price growth has increased to 10.2% in England and Wales during July, according to the latest data from e.surv’s Acadata House Price Index.
Data showed that the average price paid for a home in England and Wales in July was £370,893, up by some £2,400, or 0.6%, on the revised average price paid in June.
From the start of the pandemic in March 2020 to the end of June 2022, the average house price has increased by £52,600, representing a rise of 16.7%.
This contrasts with the increase in consumer price inflation of 11% over the same period. Property prices have thus risen in real terms.
e.surv says its HPI continues to record growth in the average house price throughout the first seven months of 2022 on a near straight-line basis, despite predictions of a slowing growth rate given the wider economic context.
Average annual regional house prices
All 10 Government Offices for the Regions (GOR) have experienced rising prices over the last twelve months, with eight of the 10 areas setting new record average house prices in June 2022.
The two exceptions are the North East, where prices in Hartlepool, Middlesborough, Stockton-on-Tees and Darlington fell by -2.1%, -1.2%, -0.8% and -0.3% respectively in the month, and in Greater London, where seven of the top 10 boroughs by value saw their prices fall in June.
Meanwhile, data shows that there are six regions – North East, Yorks and the Humber, the North West, the East and West Midlands, and the South West – where annual growth rates between May and June have increased by 4.3%, or more, all of which benefitted strongly from the stamp duty tax holiday.
The East of England and South East has seen the annual rate of house price growth between May 2022 and June 2002 somewhat lower at 3.1% and 0.3% respectively.
Greater London saw a negative change in rates between the two months at -2.5%.
The data also found two noticeable troughs in prices, which occurred one month after the changes in the SDLT in April 2021 and July 2021.
e.surv explains that this indicates the extent to which buyers were able to bring forward their purchases into a tax-saving month, resulting in lower prices the following month when there were fewer buyers for the more costly properties due to the higher rates of tax being re-applied.
In Wales, although it too had an LTT tax-saving scheme in place, it was only on the first £250,000 of a home’s value – as opposed to England’s SDLT scheme applying to the first £500,000 of a property’s value.
The maximum tax-saving in Wales was therefore £2,450 compared to £15,000 in England. The tax saving was thus of less importance in Wales, so the change in price in July 2021, at the ending of the scheme, had less impact than in England
As a consequence, in June 2022 Wales is no longer at the top of the GOR growth league table, displaced by both the South West and the East Midlands.
These regions had risen up the ladder due to the larger downward movement in prices observed twelve months earlier in July 2021.
Heatmap
Looking at e.surv’s regional heatmap, there are three distinct groupings in England and Wales in terms of house price growth, with the hottest markets in England and Wales having rates in excess of 11.0%, being the South-West (14.4%), the East Midlands (12.1%), Wales (12.0%) and the East of England (11.8%).
The middle tier consists of the West Midlands (10.1%), the South East (9.9%), Yorks and the Humber (8.6%) and the North East (7.2%).
Finally in 10th position sits Greater London (5.5%). e.surv says this is “a considerable turn-around from the previous month” when London was in fifth place in the league table with growth at 8.0%.
Housing market in summer 2022
Given all the data uncertainties that exist, e.surv says “a degree of caution must be applied in assessing the figures”.
The HPI says: “With sharply rising interest rates and gloomy predictions regarding the state of the economy, it is probably too easy to focus on all the downside risks.”
“While in the short term, the housing market is to a degree insulated from some of what is unfolding, and prices may be lagging behind the emerging realities, as the economy slows and monetary tightening continues, so housing markets could come under pressure. However, as the Bank of England’s Chief Economist has suggested, though the market may slow, it will not contract in line with previous major downturns.”
“For the moment, the data does not indicate we have reached an inflexion point in price trends,” it adds.
Commenting on the latest data, e.surv director Richard Sexton says: “We have spoken before about records being broken but the strength of house prices in the UK continues to perform in stark contrast to the general tone of broader UK economic news.”
“We know the market faces some headwinds that have not yet made themselves felt in the data we are seeing for sale prices to date. But we should not forget that there are also more positive tailwinds that continue to mean residential property is an attractive proposition for many.”
“Full employment and the available returns which our data shows, make housing a good investment choice compared to many other asset groups. There are some buyers and investors fortunate enough to be more immune to interest rate rises so far and they are still buying and selling.”
“It may feel like a lifetime ago, but from the outset of the pandemic in the first quarter of 2020 to the end of June 2022, the average house price has increased by some £52,600, or 16.7%. This contrasts with the increase in consumer price inflation (including housing – CPIH) of 11.0% over the same period. Property prices have risen in real terms.”
“Obviously increasing rates will impact appetites and create affordability issues for some, but the supply issues facing the market remain a force for maintaining pressure for house price growth.”
