The latest figures released yesterday show that residential property prices in the UK increased 9.8% in March on an annual basis, with the average home being valued at £278,000.

The latest house price index data from the Office for National Statistics reveals that house prices in the UK have decreased from 11.3% in February this year.

The average price of a home increased over the year in England to £298,000, up 9.9%), in Wales to £206,000 (+11.7%), in Scotland to £181,000 (+8%) and in Northern Ireland to £165,000 (+10.4%).

London continues to see the lowest annual growth, as average prices increased by 4.8% over the year to March 2022, down from 7.8% in February 2022.

Industry reaction:

Guy Gittins, CEO of Chestertons, commented: “Historically, spring marks the beginning of increased market activity with a surge in properties coming to the market. Not even half way into March, we had also already witnessed a spike in buyer enquiries and sales compared to the same time period last year. ”

Nick Leeming, Chairman at Jackson-Stops, commented: “March house prices continue to show a market brimming with demand, increasing 9.8% year-on-year. Although the pace of growth was slightly below February’s high of 11.3%, it remains clear that house prices are outpacing expectations once again despite headlines on interest rates rises and consumer spending power dominating our front pages.

“We may see the cooling effects come into play more in the coming months, but significantly, unlike other periods of high inflation, it is the sustained demand from home buyers that will continue to press house prices upwards in the short term in spite of macro-economic headwinds.

“Recent data from the Jackson-Stops network shows that the typical bounce seen at this time of year has an extra spring in its step, with over half of our UK branches not only seeing an increase in buyer demand in April, some by more than double, but also witnessing a boost in supply of homes on the market. We would anticipate this momentum continuing for the next quarter, in which a period where demand is lower than supply remaining considerably far off. What our data will start to show is that our reactive market remains buoyant for those correctly priced properties.

“Regionally, ONS data indicates it is the East Midlands steaming ahead in annual house growth, increasing 12.4% annually. Our Jackson-Stops Northampton branch has equally reported a period of high activity in several hotspots including Rutland and the surrounding villages, with both new instructions and buyer volume on a steady incline this year as buyers look beyond the traditional commuter belt for better value.”

Tom Bill, head of UK residential research at Knight Frank, remarked: “Demand and supply in the UK housing market are rebalancing, which means price growth should be kept to single digits. The growing warnings over the economy, the ongoing cost-of-living squeeze and rising mortgage rates are all playing their part in taming demand, which has gone from ferocious to robust. More significantly for prices, supply is building as the economic warnings become starker, with more owners deciding the housing market may be peaking and now is the time to sell.”

Emma Cox, manging director of real estate at Shawbrook, said: “It’s likely that many will pause their property plans. However, for now the property market remains in good stead. Demand continues to be high, outweighing supply, and leading to competitive bidding wars that are pushing prices up further.

“More quality supply is clearly needed, but with the cost of material and labour on the rise, new properties are likely to continue to edge prices further up.”

Andy Sommerville, Director at Search Acumen, said: “The latest ONS data reports a 9.8% house price increase compared to March 2021. The annual growth rate slowed down a little compared to February, but monthly ebb and flow is normal and not indicative necessarily of a wider trend. If you look over the last year, price growth rates have been fluctuating between 8.9% and 13.3%, which is an unprecedented level of sustained growth and March’s data shows that house prices remain at the record levels seen in February, clearly reflecting we are experiencing a continued period of high demand, supported by interest rates that still remain low by historic standards. It’s a sobering read for any would-be buyers trying to get a rung on the ladder, especially those on lower incomes, with less borrowing power. What will be more telling are the results in the coming months, where data may start to reflect the more recent reported drop in online property searches and increase in down valuations since some banks have tightened their lending rules and reduced the borrowing power of mortgage applicants.

“While demand remains extremely strong compared with the lack of available stock, a situation that has exacerbated the high pricing we have seen over the last two years, the pendulum of power from sellers to buyers will inevitably swing – to what degree is yet to be seen. Rising interest rates, along with inflation and cost of living pressures, will at some point take more heat out of the market which will bring an end to a period where record prices have been announced every month for some time. If we do see any uptick in mortgage arrears, repossessions, or simply more sellers coming to the market, then it’s sensible to anticipate a levelling out in house prices. Equity rich homeowners will remain largely immune but struggling families, first time buyers and those who need to remortgage, will sadly be disproportionately affected. The saving grace is that wages are also on the up, which may mitigate any looming decline in property values if house price to earnings ratio remains relatively stable.

 “Since the interest rate rise in early May, conveyancing firms are operating at a frenetic rate to help buyers get over the line whilst their mortgage in principle still stands. The lending market is moving faster than Land Registry based valuations, making today’s transactions incredibly time sensitive on both sides of a chain. This underscores a historic problem with our transaction process; not only is it incredibly slow, but it has the very real ability to make even a timely transaction collapse. In February we saw homebuyers battle with 135-day delays, where the average time between instruction and completion jumped 48% since 2020. The digitalisation of the industry as a whole will help the market respond to future peaks and troughs, ensuring our housing market remains robust in the long term.”