House prices continued to rise at a “brisk pace” in May – with average property values surging by 9.2% annually, Halifax has reported.
The average UK property price increased by 0.6% month-on-month in May, taking the typical value of a home to £213,472.
The annual rate of increase in May remained at April’s figure of 9.2%.
But the quarterly pace of change – which is often a good indicator of the underlying trend – softened slightly.
On a quarterly basis, house prices in the three months to May were 1.4% higher than in the preceding three months. This was slightly below the 1.5% quarterly increase recorded in April and marked the lowest rate of quarterly price growth since November 2015.
Martin Ellis, a housing economist at Halifax, said: “Low interest rates, increasing employment and rising real earnings continue to support housing demand. The strength of demand, combined with very low supply, is causing house prices to rise at a brisk pace.”
But he said that increasing affordability issues, caused by a sustained period of house prices growing faster than earnings, should “result in some slowdown in house price growth as the year progresses”.
Sarah Beeny, owner of estate agent Tepilo, said the property market is still readjusting from a stamp duty increase for second home buyers, including buy-to-let investors that came into force on April 1 and resulted in a flurry of property sales taking place before the deadline for the tax increase.
She said: “There is likely to be some uncertainty caused by the upcoming EU referendum but I think all signs point towards the market growing at a steady and sustainable pace post-June 23, whatever the result, especially as we enter the summer sales period – traditionally one of the market’s busiest times.”
Howard Archer, chief UK and European economist for IHS Global Insight, said: “The strong suspicion is that housing market activity will be pressurised in the immediate term by a combination of weakened interest from the buy-to-let and second home sectors as well as heightened concerns and uncertainties over the UK economic outlook, particularly in the run-up to June’s referendum on EU membership.”
He said house prices are likely to be “soft” in the next few months, but added that a shortage of properties to choose from is likely to help to keep property values up.