House prices rise nearly 13% in a year with cost of new home £32,000 more expensive

The figures for the year to May 2022 are up from 11.9% in the year to April 2022, the Office for National Statistics (ONS) found, meaning the average price of a house in the UK in May 2022 was £283,000.

Asking prices have also risen to a record high for the sixth month in a row, separate analysis by Rightmove suggested.

A serious lack of supply is driving prices up, with 40% fewer properties on the market compared to before the pandemic in 2019, according to Rightmove.

The cost of a home is now £32,000 more than it was in May 2021, according to the ONS. The average price of a home, according to the ONS, is broken down as:

The South West of England has seen the biggest increase, up 16.9% in the year to May, followed by the East Midlands (up 15.2%), and the East of England (up 14.8%).

London continues to lag behind the rest of the UK with growth at 8.2%, as people are still relocating away from the capital. Although still growing rapidly, other English regions with below average growth are the North East (up 9.7%), North West (up 11.5%), Yorkshire and the Humber (up 12.6%).

Despite London appearing to suffer a misfortune in growth, it is still the most expensive place to buy a home, with the average price standing at £526,000 in May 2022.

Meanwhile, the North East is the cheapest place to buy, with the average home costing £154,000.

However, Halifax, the country’s largest mortgage lender, reported that UK house price growth has just turned negative, slipping 0.1% from June to July. That said, they also reported that house prices in July 2022 were 11.8% higher than July 2021.

Tom Bill, head of UK residential research at Knight Frank, expects house price growth to continue but at a slower pace: "... the fundamentals of the property and labour market are strong and we would expect double-digit annual growth to become single-digit growth by the end of the year."

Rightmove predicts house prices will return to "more normal" levels during the rest of this year.

Tim Bannister, of Rightmove, said: "With such an imbalance remaining between supply and demand, prices look underpinned, and we would therefore only expect typical smaller seasonal month-on-month falls, rather than more significant price falls in the second half of the year."

Erin Yurday, co-founder and CEO of NimbleFins, said: "Not only are house prices continuing to be affected by a lack of supply, but the hangover from the stamp duty holiday has inflated values.

"Last-minute changes to the stamp duty holiday deadline saw buyers rush through sales on more than one occasion through last year. This meant they were more willing to offer the asking price, safe in the knowledge they would pay less stamp duty.

"Although this is the seventh consecutive month of house price rises, early 2021 was quite slow for the market, so this may also be why we're seeing double digit growth.

"The cost of living crisis could be what slams the breaks on what has become a scarily unaffordable market for many. With the price of powering a bigger home, plus interest rate rises hammering mortgage holders, could more people decide to stay where they are?

“Those who want to move or buy for the first time may want to consider getting a longer term fixed rate mortgage so they have more certainty over what their monthly outgoings will be.” Find out what the interest rate rise means for each type of mortgage here.

See our article regarding more recent house price rises from September 2022 here.