The average cost of a home rose 1.4% in February, according to the Halifax Monthly Real Estate Index, and is 11% higher than a year ago, about the largest annual increase since the 2007 financial crisis. The new record is about £ 28,113 higher than a year ago, not far from the UK average earnings over the same period of £ 28,860. March was also the ninth consecutive month that prices rose, with monthly gains at the highest level since September, when they rose 1.7%. Average prices have increased by 43,577 £ since the first lockdown for the coronavirus in 2020. The continuous increase is due to the lack of homes for sale and the increase in demand for larger homes associated with the “space race” pandemic. Trends in hybrid work and more time at home have prompted many people living in cities to consider relocating to more rural areas. Russell Galley, CEO of Halifax, said: “While there is recent evidence that more homes are being marketed, the fundamental issue remains that too many buyers are chasing too few properties.” However, Halifax said the cost-of-living crisis – with households squeezed out of rising energy and food bills – is likely to limit rising house prices next year. The UK’s annual inflation rate reached 6.2% in February, the highest in three decades, and the Bank of England said that rate could rise to 10% later this year, putting further pressure on living standards. Subscribe to the daily Business Today email or follow the Guardian Business on Twitter at @BusinessDesk It is likely to lead to higher interest rates as part of policymakers’ efforts to keep prices under control. The Bank of England had already raised interest rates to pre-pandemic levels of 0.75% last month. “In the long run, we know that housing market performance remains inextricably linked to the health of the wider economy,” Galley said. “There is no doubt that households are facing a significant squeeze on real profits and the difficulty for policymakers to support the economy but contain inflation is now even greater due to the effects of the war in Ukraine. “Therefore, buyers face the prospect of higher interest rates and a higher cost of living. “With affordable price measurements already highly expanded, these factors should lead to a slowdown in house price inflation next year.”
