House price growth hits 9.6% – ONS

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Average UK house prices increased by 9.6% in the year to January 2022, according to the latest UK House Price Index published by the Office for National Statistics (ONS).

This figure is down from the 10.0% that the ONS reported for December 2021.

The latest figure for growth took the average UK house price to £274,000 in January, a level £24,000 higher than the same month last year, the ONS confirmed.

Average house prices increased over the year by 9.4% in England to £292,000, by 13.9% in Wales to £206,000, by 10.8% in Scotland to £183,000, and by 7.9% in Northern Ireland to £159,000.

The index also confirmed that London continues to be the region with the lowest annual growth at 2.2%.

Perenna COO, Colin Bell, commented: “While demand remains strong in the market, we must not ignore the elephant in the room – house price inflation. First-time buyers are now battling record inflation and rising interest rates in their bid to step onto the property ladder. If we are to ensure homeownership remains a viable goal for all, rather than a few, the sector needs to rethink the way it supports these buyers.

“Flexible long-term fixes will be key to recovering from this affordability crisis as they help buyers to spread their repayments over a longer period. Indeed, for prospective homebuyers, long-term fixed repayments offer peace of mind, especially during these periods of record inflation levels. As such, it will be unsurprising if we witness increased numbers choosing to lock into long-term deals as 2022 continues.”

Hargreaves Lansdown senior personal finance analyst, Sarah Coles, added: “As higher rates feed into the cost of new mortgages, buyers will find their monthly payments more off-putting. With prices rising on all sides, it could be enough to convince far more buyers that now is not the right time to be stretching their budgets so thin.

“This is likely to be particularly striking among those looking for detached family homes, which have continued to see faster price inflation than any other kind of home. Anyone in the market for a new build is also likely to think twice after eye watering price rises: the average price of this kind of property is up more than a quarter in a year.

“The lag in house price data, and the fact that in March we’re seeing figures for sales agreed some time between October and December last year, means we won’t see the impact of rising prices and rates take effect for a few months yet.

By Alex Groom, 30th March 2022.