House prices increased by 10.8% in the year to February 2022, representing the steepest increase since 2007, Halifax’s House Price Index has revealed.
Prices rose by 0.5% in a single month, bringing the average house price in the UK to £278,123.
Two years from the start of the pandemic, average property values have risen by £38,709 (16%) since February 2020.
Russell Galley, managing director, Halifax, said: “This is the biggest one-year cash rise recorded in over 39 years of index history.
“Lack of supply continues to underpin rising house prices, with recent industry surveys showing a dearth of new properties being listed, now a long-term trend.
“This may be a particular issue at the larger end of the property market.
“Over the past year the average price of detached properties (£43,251, +11%) have risen at a rate more than four times that of flats (£10,462, +7%) in cash terms.
“Looking ahead, as Covid moves into an endemic phase and almost all domestic restrictions are removed, geopolitical events expose the UK to new sources of uncertainty.
“The war in Ukraine is a human tragedy, but is also likely to have effects on confidence, trade and global supply chains.”
He went on to discuss the impact of surging oil and gas prices, which is set to push the UK’s already lofty inflation rate (5.4% in December) higher for longer.
This will squeeze household incomes, weighing on buyer demand.
Scott Clay, distribution development manager at specialist lender, Together, said: “The cost-of-living crisis fuelled by geopolitical tensions, supply shortages and rising inflation continues to stifle households and financial institutions alike. As wallets slam shut, homeowner’s are fretting about surging energy bills and there may be a growing nervousness about the ability of borrowers to pay back loans.
“Looking ahead, it’s likely that house price growth will slow down as prices peak and priorities shift. For example, homeowners may focus their efforts in making their homes greener to drive energy costs down and improve their financial positions, especially with the government’s EPC grants up for grabs from April.”
Wales is currently experiencing the highest house price growth of 13.8%, bringing prices in the country upto £ 207,184.
The South West of England also saw annual house price inflation of 13.4%, with by far the strongest quarterly growth (3.5%) of any region (average house price of £293,968).
Elsewhere Northern Ireland also continues to record strong price growth, with prices up 13.1% on this time last year, giving an average property value in February of £173,911.
Despite the annual rate of house price growth picking up to 9.2%, remarkably Scotland now has the ‘weakest’ rate of annual growth of any area outside of London.
London remains the weakest performing area of the UK, though the capital continued its recent upward trend with annual house price inflation now standing at 5.4%, its strongest level since the end of 2020.