In the near-term, high demand and a shortage of new properties coming onto the housing market are likely to push up house prices, and it would appear that many potential buyers have not been deterred by increasing costs.
The ONS said increases in household and transport costs, such as electricity, gas and fuel bills, were the largest drivers in the rise of the Consumer Prices Index (CPI) measure of inflation to 6.2%, and yet Bellway, a top five UK housebuilder by number of homes built, said on Tuesday that rising house prices will continue to offset the impact of inflation.
Annual house price growth in the UK hit 12.6% in February this year, the latest data from Nationwide shows, pushing the average price of a home up more than £29,000 to £260,230.
According to the lender, “a combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.”
Despite his short-term house price growth expectations, Jason Honeyman, chief executive at Bellway, accepts that rising costs is likely to cause demand for property to eventually slow in the medium- to longer-term.
“I worry about that cost-of-living increase impacting people’s appetite or ability to buy,” he said.
“It’s inevitable that the market will moderate, but I don’t think it will crash or grind to a halt,” he added.