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Northern Ireland and Wales are seeing the fastest house price inflation
Here’s a regional breakdown of UK house price growth from Halifax:
Northern Ireland once again topped the table for annual house price inflation, up 15.2%, equating to an average property price of £187,833. Wales also continues to record strong annual growth, up 14.3%, with an average property cost of £219,281. Meanwhile, the South West saw the highest annual house price increase of any region in England, at 14.2%, where a typical home now costs £308,128. Scotland also saw a rise in annual house price inflation, up to 9.9%. A house in Scotland now costs an average of £201,549, breaking the £200,000 mark for the first time in history. London continues to lag behind other regions in terms of annual house price inflation (+7.1%), although with an average property price of £547,031 it remains by far the most expensive place in the UK to buy a home.
Updated at 08.21 BST Shares in Persimmon fell 5% in early trading after it said in the city it built fewer homes than expected in January-June.
Lotus: House completions are delayed due to delays and shortages
Design delays, problems obtaining materials and a shortage of construction workers slowed the number of homes Persimmon could build this year. Britain’s biggest housebuilder says it completed 6,652 homes in the first half of 2022, slightly less than expected. This is down from 7,406 in the first half of 2021, reducing Persimmon’s revenue to £1.69bn from £1.84bn. However, despite this, Persimmon expects earnings for H1 to be “moderately above” its expectations. Dean Finch, chief executive of Persimmon, said: As we rebuild our exit site, delays in the scheduling system, disruptions in material supply chains, and challenges in securing labor have impacted period completions. However, we expect earnings in the half to be modestly above our expectations, reflecting strong demand and positive pricing conditions. The sheer lack of housing on the market has continued to drive up prices, experts agree. Here is Jeremy Leaf, a north London estate agent and former chairman of RICS: “Despite concerns about the rising cost of living and interest rates, excess demand over supply continues to influence and drive activity. Appraisals and listings are increasing but not fast enough to keep up as sellers try to take advantage of the market peak or as close to it as possible, but transactions are slowing and lengthening. “Looking ahead, we expect the market will not be immune to changes in the broader economy and we are already seeing signs of rebalancing, but no evidence of significant price corrections for now at least.” And Jason Tebb, CEO of real estate search site OnTheMarket.com: A supply-demand imbalance is behind the continued rise in prices, although this is slowly improving as more stocks become available. Signs of an inevitable but subtle market rebalancing are already evident. “The ‘new normal’, an elevated version of the pre-pandemic market, continues, with serious property seekers still determined to move.” Some instant reaction: Halifax says average house prices rose by £18,849 in the first half of 2022. That works out to a staggering £104 a day. — simon read (@simonnread) July 7, 2022 Halifax House Price Index: UK prices up 13% year-on-year to June, highest since 2004: ‘Scotland saw rise in annual house price inflation, up 9.9%. A house in Scotland now costs an average of £201,549, surpassing £200,000 for the first time in history.” — Douglas Fraser✒️🎥🎙 (@BBCDuglasF) July 7, 2022
Halifax: Home price growth is likely to slow
Despite continuing to rise in June, house price inflation is certain to slow as the squeeze intensifies. Halifax chief executive Russell Galley says: “Of course, the housing market will not remain immune to the difficult economic environment. However, for now it continues to demonstrate – as it has for the past two years – the unique combination of factors that influence prices. One of these remains the huge shift in demand towards larger properties, with average prices for detached houses increasing at almost double the rate of apartments over the past year (+13.9% vs +7.6%). Over time, though, increased pressure on household budgets from inflation and higher interest rates will weigh more heavily on the housing market, given the impact this has on affordability. Our latest research found that the strong rise in house prices over the past two years, combined with much slower wage growth, has already pushed the house price-to-income ratio to record levels. So while it may come later than previously expected, a slowdown in house price growth should be expected in the coming months.”
Introduction: UK house prices rose 1.8% in June despite the squeeze
Good morning and welcome to our rolling coverage of business, the global economy, financial markets and the cost of living crisis. UK house price inflation accelerated last month despite a squeeze on the cost of living, mortgage lender Halifax said this morning. Halifax’s latest home price index shows prices rose 13% in the year to June — the fastest since late 2004 — up from 10.7% in May. This took the average price to a new record high of almost £295,000, even as interest rates rose and inflation rose ahead of incomes. British housebuilder Persimmon also sounded confident this morning, predicting strong demand for new homes despite predictions of an impending slowdown in the housing sector. In monthly terms, Halifax says, prices rose 1.8% after rising 1.2% in May from April as “the market shows resilience”. This is the fastest growth since 2007. Prices have now risen for 12 consecutive months in the Halifax index, points out estate agent Emma Fildes of BrickWeaver. Halifax says:
House prices rose 1.8% in June, the twelfth consecutive monthly increase The annual growth rate of 13% is the highest since late 2004 The typical property now costs £294,845 Northern Ireland continues to see the strongest growth in the UK.
Russell Galley, CEO of Halifax, says prices are being supported by property shortages and wealthier families not being hit as hard by the cost of living crisis. “The UK housing market defied all expectations of a slowdown, with average house prices rising by 1.8% in June, the biggest monthly rise since the start of 2007. This means that house prices have now risen every month over the last year and are rising by 6.8% or £18,849 in cash so far in 2022, pushing the typical UK house price to another record high of £294,845. The supply-demand imbalance is still the reason house prices are rising so sharply. Demand remains strong – although activity levels have slowed to match pre-Covid averages – while the stock of available properties for sale remains extremely low. Property prices so far appear to have been largely insulated from the cost of living squeeze. This is partly because, at this time, the increase in the cost of living is felt more by people with lower incomes, who are usually less active in buying and selling homes. Conversely, people on higher incomes are likely to be able to tap into extra funds saved during the pandemic, with the latest industry figures showing mortgage lending has risen by the most since last September.
Also coming today
We are ready for the Competition and Markets Authority to publish its report on the retail fuel market. The inquiry, ordered by business secretary Kwasi Kwarteng last month, will focus on whether the 5p cut in fuel duty announced in March by former chancellor Rishi Sunak was being passed on to consumers. After hitting its lowest level since the start of the pandemic yesterday, the pound is hovering around $1.195 this morning as investors watch Boris Johnson desperately cling to power. European stock markets are poised for a strong open after falling sharply earlier this week on growing recession worries. Britain’s fiscal watchdog, the Office for Budget Responsibility, publishes an annual report on the long-term sustainability of public finances and the fiscal risks facing the UK. This will show the challenge facing new chancellor Nadhim Zahawi as he hints that a planned rise in company tax could be reduced or scrapped. Sainsbury’s shareholders will vote on whether the UK’s second largest supermarket should become a Living Wage employer at today’s AGM. The resolution, backed by a coalition of investors including Legal & General Investment Management, Coutts & Co, and the Coal Pensions Board, calls on Sainsbury’s to pay the independently determined living wage for all staff and contract workers. Sainsbury’s has increased wages for its 171,000 direct employees in more than 1,400 UK stores on the daily wage, but not for contractors.
THE AGENDA
7 am BST: Halifax UK House Price Index in June 9.30 am BST: UK’s Office for Budget Responsibility publishes its report on fiscal risks and sustainability 9.30 am BST: ONS weekly real-time indicators of economic activity and social change 11 a.m. BST: Sainsbury’s AGM begins 12.30 p.m. BST: ECB publishes accounts of latest monetary policy meeting 1.30 p.m. BST: US Trade Data for May 5 p.m. BST: Speech by Bank of England Chief Economist Huw Pill on ‘The Economic State and Monetary Policy’.
Updated at 08:00 BST
