Business is booming.

UK house prices rise at fastest rate in 18 years

UK house prices defied expectations of a slowdown and increased at their fastest pace in 18 years, boosted by a shortage of properties for sale, the mortgage provider Halifax said.

Property prices grew at an annual growth rate of 13 per cent in June, up from 10.5 per cent the previous month and at the fastest pace since late 2004. Prices rose 1.8 per cent from May, the fastest since early 2007, pushing the typical UK house price to another record of £294,845.

“The UK housing market defied any expectations of a slowdown,” said Russell Galley, managing director of Halifax.

“Demand is still strong — though activity levels have slowed to be in line with pre-Covid averages — while the stock of available properties for sale remains extremely low,” he added.

Northern Ireland topped the table for annual house price inflation, up 15.2 per cent, followed by Wales, at 14.3 per cent.

In contrast, London lagged behind other regions in terms of annual house price inflation of about half the national pace, at 7.1 per cent.

Line chart of £’000 showing UK house prices grew at the fastest annual rate since late 2004 in June

Most expect rising interest rates and the cost of the living crisis to end the pandemic-induced property boom, but prices appear to have been largely insulated from the cost of living squeeze.

Galley said that this was partly because the increase in expenses was being felt most by people with lower incomes, who are typically less active in buying and selling houses.

“In contrast, higher earners are likely to be able to use extra funds saved during the pandemic, with latest industry data showing that mortgage lending has increased by the highest amount since last September,” he added.

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