Hargreaves Lansdown comments on publication of ONS House Price Index for April 2022

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, comments on publication of ONS House Price Index for April 2022, which shows your home makes almost as much as you do.

Key points:
  • Average house prices were up 12.4% in April. They’ve increased £31,000 in a year – to a record high of £281,161.
  • It’s less than £100 shy of average annual earnings at the time of £31,096.
  • Post-pandemic prices have only risen faster once – at the peak in June last year.

Sarah Coles says:

“Your home made almost as much as you did last year, at an impressive £31,000. At the same time, inflation has been eating away at the real value of your mortgage, so anyone who owns their own home is quids in. But delight for homeowners means agony for prospective first-time buyers.

House prices have only risen faster than this once since the onset of the pandemic, and that was in the frantic rush of June 2021 when the stamp duty holiday’s most generous period was coming to an end. It has pushed house prices to an incredible new high. Meanwhile, homeowners are benefitting from one of the side-effects of inflation, in that the real value of their mortgage is dropping. It fell 9,1% over the past 12 months, even before they made a single repayment.

However, this could be as good as it gets for property owners. These figures reflect house purchase decisions made much earlier, when we had only had the very first of the interest rate rises, and the full horror of the energy price cap hadn’t kicked in. In many cases, buyers will have made an offer before the invasion of Ukraine, and well before it had a chance to feed so spectacularly into inflation.

There’s every chance we will see more weakness in the May figures. Both the Nationwide and Halifax indices now run to May, and both have fallen back. In both cases, price rises are still unusually high, but the direction of travel is worth keeping an eye on.

First time buyers

Meanwhile, for first time buyers, the picture is bleak. Prices continue to run away faster than they can ever hope to save a deposit. Even if the pace lessens, we’re not expecting the market to hit a brick wall. There’s still exceptionally little up for sale at the moment, so the market still has an enormous number of buyers who are keen to snap anything up that’s reasonably priced. This is going to keep a floor under prices for a while to come.

And while they’re desperately trying to get the money together, their rents are being hiked to compound their problems. Zoopla figures show they’re up 11% in  year – a 14-year high. If they do manage to stretch their finances thin enough to get onto the property ladder, they’ll be paying more interest on bigger mortgages at a time when the cost of everything is rising through the roof. When they’re weighing up purchasing decisions, they’d be forgiven for thinking they’re damned if they do, and damned if they don’t.”

Other April house price statistics
  • Detached house prices were up 14.9%, and semi-detached were up 13.6%, while flats were up 7.6%.
  • New build prices were up 23.7%.
  • House prices in London were still the highest in the UK, at £530,000.
  • Prices in the South West saw the highest annual growth at 14.1%, while London saw the lowest annual growth of 7.9%.
  • Prices in the North East remain the lowest in the country, at £155,000.


Kindly shared by Hargreaves Lansdown

Main article photo courtesy of Pixabay