Up to date house prices for the first quarter of 2022 are now available, as Nationwide adjusted its House Price Index (HPI) this morning. Britons will be keeping a close eye on the market as they tackle a slew of factors impacting their cost of living. Unfortunately for some, the updated index brings additional doom and gloom, despite new confidence.
The Nationwide HPI shows house price inflation remains significant in the double figures.
While growth slowed slightly, dipping to 11.2 percent from April’s 12.1 percent, homes remain far more expensive than in the same period of 2021.
The average home costs £269,914, £27,082 more than it would have last year.
Nationwide economists said the market is holding up despite predictions it would cool significantly over 2022.
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While the news is positive for homeowners looking to sell their properties, it is less so for renters.
Experts have spoken out about the implications for a generation of Britons, “generation rent” who have the most difficulty affording homes.
They end up at the sore end of the deal in the index, said Gary Wright, co-CEO of payment technology firm Flatfair.
Mr Wright said the index’s findings mean house prices are stacked against the UK’s average earners.
He said: “Despite growth marginally slowing, house prices are still at a record level – and continue to creep up.
“As the average price of a home is now more than 8.5 times the average salary, vast swathes of the country will likely be renting for the rest of their lives.
“Amidst a cost of living crisis, finding five weeks’ rent for a deposit is becoming impossible for many.
“Releasing the £4.5 billion locked away in rental deposits by opening up the market to deposit alternatives would ease the pressure on Generation Rent.”
Renters may get a reprieve soon as analysts believe the property market will continue to cool.
Commenting on the HPI, Robert Gardner, Nationwide’s chief economist, said his organisation expects inflation will slow “as the year progresses”.
He cited several potential inflation drags, primarily those contributing to the high cost of living.
Mr Gardner said household finances would likely “remain under pressure” from inflation prompted by high global energy prices.
Energy regulator Ofgem has announced it will raise the price cap for the second time in 2022, crunching incomes again.
The regulator will add £830 to the ceiling, with the new proposed cap reaching £2,800.
Mr Gardner added measures of consumer confidence have “fallen towards record lows”, and steps taken by the Bank of England would also push inflation down.
If the Bank of England raises interest rates, the move could “exert a cooling impact on the market” if it “feeds through to mortgage rates”.