Halifax House Price Index June 2022

Surprise jump in house prices

Source: Halifax, IHS Markit

Key trends

The UK housing market defied any expectations of a slowdown in June, with average property prices up 1.8% MoM in June, the biggest monthly rise since early 2007.
House prices have risen consistently every month over the last year and are up by 6.8% or £18,849 in cash terms so far in 2022, pushing the typical UK house price to another record high of £294,845.
The supply-demand imbalance continues to drive the sharp rise in house prices. Demand remains robust (albeit activity levels have slowed to pre-pandemic norms), while the stock of available properties for sale remains extremely low.
The market continues to show a huge shift in demand towards bigger properties, with average prices for detached houses rising by almost twice the rate of flats over the past year (+13.9% vs +7.6%).

Outlook

Property prices so far have been largely insulated from the cost of living squeeze. This is partly due to the disproportionate impact of high inflation on people with lower incomes, who are typically less active in buying and selling houses. In contrast, higher earners can use extra savings accumulated during the pandemic to help fund purchases.
However, we do not expect the housing market to remain immune from the weakening economic environment for much longer, given growing pressure on household budgets from inflation and higher interest rates, and the impact this has on affordability.
The strong rise in property prices over the last two years, coupled with much slower wage growth, has already pushed the house price to income ratio up to a record level.
While it may come later than previously anticipated, a slowing of house price growth is still expected in the months ahead.
That said, a major market correction appears unlikely given that housing stock remains low, particularly for in-demand properties such as family homes with gardens.