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PwC comments on ONS March house price figures

18/05/22

UK house prices rise 9.8% in the year to March 2022 but the rising cost of living is likely to weigh on the outlook

Commenting on the latest house price data, Jamie Durham, economist at PwC UK, said:

"The UK housing market remained strong in March with prices up 9.8% on last year, although this represents a slight slowdown from the 11.3% rise in February. 

"It is clear from this data that despite the rising cost of living, pressures on household budgets have not yet had a significant impact on house price growth.

"Prices in London rose by 4.8%, making it the region with the lowest annual price growth for the 16th consecutive month. Lower growth in London is reflective of the capital's high average prices which, at £524,000, is nearly double the UK average. 

"Such high, persistent house price growth over the last 12 months has been supported by a range of factors, including demand outstripping supply, a shift in preferences towards properties with more space, the accumulation of more than £200m of savings during lockdowns, and relatively low borrowing costs.

"Looking forward, the most significant risk to the outlook is the increasing cost of living, with inflation expected to peak at over 10% later this year and interest rates expected to rise to 2.5% by mid-2023. These increases have contributed to a rapid decline in consumer confidence, and together are likely to affect whether households are willing to make major financial decisions like purchasing a home over the coming quarters. 

"In the next few months, ongoing strong demand, supported by mortgage approvals remaining higher than pre-pandemic, is likely to support continued house price growth. However, we do expect the rising cost of living to contribute to a slowdown in demand over the coming quarters, and for price growth to slow from the double-digit rates we have seen over the last year."

Ends

 

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