House prices ‘have gone down the rabbit hole’ as they hit fastest annual pace since 2007

The average cost of a home is now more than £350,000 according to Rightmove after a 1.7% rise.

Latest figures from the house sale website showed asking prices hit an average £354,564 in March in what is the biggest monthly rise for this time of year in 18 years.

It is a surge of £5,760 compared to February, and the chance of someone finding a buyer in the first week of listing is higher than it has ever been, Rightmove says. In fact, sellers are twice as likely to get an offer on their home in the first week compared to the same time in 2019.

Tim Bannister, Rightmove’s director of property data, said: “Many of those who are selling in this record-breaking market obviously also face the prospect of buying again in the same market, and being in fierce competition against other buyers. “Having a buyer for your own property, subject to contract, puts those who are buying again in a powerful position compared to buyers who have yet to sell, and agents report that these ‘power buyers’ are more likely to get the property that they want and negotiate the best deal on price.”

Rightmove's eye-watering data does not quite match up to Halifax's, which puts the average price of a home at £278,123.

However, the 0.5% increase compared to February is enough for analysts to describe house prices as having "gone down the rabbit hole".

Lewis Shaw, founder of Mansfield-based independent mortgage broker, Shaw Financial Services: "The UK property market has gone down the rabbit hole. In a harsh climate of rising interest rates, raging inflation and impending National Insurance tax hikes, the property market dances to its own tune and prices continue to rise. Economic logic suggests prices should be coming down but the surreal lack of stock is keeping values buoyant."

House prices have soared 10.8% in the last year - the fastest growth since June 2007, according to Halifax.

With families looking for bigger homes due to the increase in working from home, the price of detached properties has risen four times as fast as flats in cash terms, Halifax says.

But with households squeezed by inflation, the National Insurance increase and soaring energy bills, prices will stabilise later in the year, some forecasters say.

Russell Galley, managing director of Halifax, said: “Looking ahead, as Covid moves into an endemic phase and almost all domestic restrictions are removed, geopolitical events expose the UK to new sources of uncertainty. The war in Ukraine is a human tragedy, but is also likely to have effects on confidence, trade and global supply chains.

“Surging oil and gas prices are one immediate consequence, meaning that inflation in the UK – already at a 30-year peak – will remain higher for longer. This will add to the squeeze on already stretched household incomes.

“These factors are likely to weigh on buyer demand as the year progresses, with market activity likely to return to more normal levels and an easing of house price growth to be expected.”

Looking regionally, Wales saw the biggest growth in house prices, rising 13.8%, with an average property price of £207,184.

Also seeing a double-digit increase was the South West of England, with a 13.4% rise (and an average house price of £293,968), suggesting rural and scenic locations are becoming more popular as families look for more space in the wake of Covid.

London saw the weakest growth, of 5.4%, but this is its strongest performance since the end of 2020 according to Halifax.

Marcus Wright, MD of property broker, Bolton Business Finance: "Many of our landlord and property developer clients are expecting business as usual this year. They are continuing to invest and are expecting another good year for UK house prices. Demand from buyers is still strong and buy-to-let mortgage rates have only seen minor increases since the recent Bank of England rate rises given the level of competition among lenders. Overall, the outlook remains oddly positive amid the cost of living crisis, but if inflation continues on its upwards trajectory, things may well change. Any escalation of the war in Ukraine could also impact the market."

Check out which areas of the UK saw the biggest house price rises in 2021.