UK house prices have hit record highs as the country braces for a looming cost-of-living crisis.
The average cost of houses in January was a record high of £276,759, which is £24,500 more than at the beginning of last year and £37,500 more than two years ago.
But increasingly with wage growth sluggish and inflation hitting incomes – as well as a string of new tax hikes coming into force later this year – mean that prices are likely to slow down in the coming months.
Younger generations face ‘significant barriers’
Russell Galley, Halifax managing director, said: “While the limited supply of new housing stock to the market will continue to provide some support to house prices, it remains likely that the rate of house price growth will slow considerably over the next year.”
The bank suggested affordability is staying at historically low levels because of the pressure on earnings, and warned the situation could worsen.
“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 rising interest rates begin to feed through to mortgage rates,” said Galley.
He added: “Despite record levels of first-time buyers stepping on to the ladder last year, younger generations still face significant barriers to homeownership as deposit requirements remain challenging.”
Over the last four months of 2021, house price growth increased by over one per cent every month, and are staying 9.7 per cent higher compared to January last year.
House price hikes by region
House inflation in Wales rose by 13.9 per cent to £205,253 compared to January 2021 and in Northern Ireland it increased by an average of 10.2 per cent to £170,982 and in Scotland by 8.9 per cent to £192,698.
In England, the north-west saw the second highest yearly increases in the UK – of 12 per cent, to £213,200. Meanwhile, in London, annual growth was 4.5 per cent.
Anthony Codling, chief executive at property data site Twindig, said: “Those with a big deposit will be able to rise above the living and mortgage cost rises, those without will not unfortunately. The deposit poor will also find it harder to save as living costs rise.”
Despite the financial hardships across the board, Kirstie Allsopp, the daughter of an Eton-educated Baron said she gets “enraged” when young people cannot buy their first home.
Allsopp has attracted hundreds of reactions after telling young people struggling to buy a home to just look for cheaper areas and give up their gym and Netflix memberships.
But she bought hers with the help of her family when she was 21, while she was earning £11,500 a year and average UK house prices were £51,000, about five times her salary.
Today, average house prices are around £260,000, which means around nine times the average salary, which even with family help is still almost twice as expensive as it was for her.