British house prices are expected to slow “considerably” over the next 12 months as households face a cost-of-living squeeze, mortgage lender Halifax said on Monday.
Price in January rose 0.3% month on month, the slowest pace since last June in a further confirmation that the post-Covid pandemic recovery is running out of steam as soaring consumer prices dampen sentiment. Year on year, prices were 9.7% higher.
“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 rises in interest rates begin to feed through to mortgage rates,” said Halifax managing director Russell Galley.
He added that it remained likely that the rate of house price growth “will slow considerably over the next year” and, despite affordability at historically low levels, price rises were outpacing wage growth with younger buyers also struggling to raise deposits.
Buyers face much tougher conditions, with the Bank of England raising interest rates last week for the second time in two months as rampant inflation hits a 30-year high. UK finance minister Rishi Sunak has added to the pain with a manifesto-busting tax hike set to kick in from April 6.
