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UK house prices hit yet another record figure in May, numbers on Monday showed, as the housing market shows little sign of being stifled by successive interest rate hikes.
According to property portal Rightmove, UK house prices climbed 2.1% monthly to £367,501 in May, from £360,101 in April. Monthly growth accelerated from April's 1.6% rise.
Annual growth in May was 10%, largely in line with April's rise.
Over the past two years, the average UK asking price has surged £55,000. That growth towers above the £6,000 climb in the two years prior to the pandemic.
The UK housing market re-emerged from the initial spring 2020 lockdown strongly.
The sector benefited from stamp duty relief that was only recently removed.
In March 2021, UK Chancellor of the Exchequer Rishi Sunak extended the stamp duty cut granted in 2020 to the end of June 2021 at a £500,000 nil rate band, which was then tapered to a £250,000 threshold until the end of this past September.
The May house price surge comes despite the Bank of England raising interest rates again. Earlier in May, the BoE raised interest rates to its highest level since 2009.
The Monetary Policy Committee voted by a majority of six to three to increase Bank Rate by 0.25 percentage points, to 1.00% from 0.75%. It was the BoE's fourth rate hike in-a-row.
‘The average price of property coming to market has hit a new record for the fourth consecutive month,’ Rightmove said.
‘This fourth consecutive price record comes alongside a fourth successive interest rate rise, but this rate rise and other household economic concerns do not appear to have dented the motivation and urgency to move that are felt by many, though there are signs that the market is starting to ease.’
Rightmove continued: ‘The number of buyers contacting estate agents is 14% down on the stamp-duty-fuelled market of this time last year, but is up by 31% on the more comparable market of 2019. The number of properties available to buy is 55% down on the levels seen in 2019, meaning that supply and demand look likely to remain out of kilter for at least the rest of the year.’
The number of agreed sales in the year to date is up 12% from 2019 levels, but down 17% year-on-year, Rightmove noted.
‘These numbers suggest that a lack of homes for sale rather than a lack of desire from buyers is what is dictating the pace of the market. New stock is most urgently needed in the mid-market sector of two and three bedroom semi-detached homes, which are seeing the most competition from buyers,’ Rightmove added.
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