Wed, 06 Jul 2022

Officials note UK home prices slow in increase in May

Robert Besser
24 Jun 2022, 02:55 GMT+10

LONDON, England: Prices for British homes this month rose at the slowest rate since January, as the cost of living crisis and potential interest hikes continue squeezing home-buyers.

Asking prices for homes for sale between 15th May and 11th June were 0.3 percent higher than one month earlier, down from a 2.1 percent rise in prices in May.

Asking prices are also up 9.7 percent compared with one year earlier, less than the 10.2 percent increase in May.

"The exceptional pace of the market is easing a little, as demand gradually normalizes and price rises begin to slow, which is very much to be expected given the many record-breaking numbers over the past two years," said Rightmove director Tim Bannister, as quoted by Reuters.

Rightmove expects annual price increases to slow further over the year at 5 percent.

Of note, the UK property market is slowing, reflecting an overall weakness as the public is facing the highest consumer price inflation in 40 years, Bank of England Deputy Governor Jon Cunliffe said earlier this month.

Since December, the Bank of England raised interest rates five times to 1.25 percent, and financial markets expect them to reach 3 percent by the end of 2022.

Since the start of the COVID-19 pandemic, house prices surged in the UK and other Western countries, as many residents had spare disposable income and sought larger houses to work from home.

According to Rightmove, the number of prospective buyers per home for sale was 6 percent higher than one year ago, and still more than double the level before the pandemic, though it dropped by 8 percent in the past month.

The process for buying a home now takes five months, on average, 50 percent longer than in 2019, it added.

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