House price growth slows but buyers still hungry for homes

House price growth slows but buyers still hungry for homes

By Ellie Isaac

Share this article

House price growth has slowed a little, but demand is holding up and buyers are making moves. Our House Price Index reveals how the housing market’s looking and what to expect in the next six months.

UK house prices have risen 8.3% in the last 12 months, bringing the average home price to £256,600. 

That’s a slower rate of growth compared to March’s recent high of 9.6% year-on-year. But prices are continuing to rise faster than the average annual rate over the last five years.

Track your home's value

Committed buyers continue to push ahead despite growing economic pressures

Despite higher mortgage rates and cost of living pressures, we’re seeing committed buyers push ahead, even as we enter the summer holiday period.

Demand has slowed in the last few months, but it's still 25% above the five-year average and on par with this time last year.

A bar chart showing demand and supply in June 2022 vs April 2022. Demand has fallen from 58% to 26%, sales agreed fallen from 18% to 17%, supply up from 3% to 5%, stock up from -40% to -29%

The housing market is proving more resilient than many expected.

So much so, we’re now predicting higher house price growth and more sales in 2022 than we anticipated at the start of the year.

The UK is on track for 1.3 million sales in 2022 with a house price growth of 5%, highlighting the continued interest in buying property.

Our data shows there are enough people who want to keep moving to support normal levels of activity in the market.

Let's put you in touch with an agent

House price growth set to slow, but falls not expected

The housing market is not immune from the impact of higher mortgage rates and the cost of living squeeze.

House price growth is slowing off a high base at the start of 2022. And we expect the rate of growth to slow further over the second half of the year, but not as fast as some may expect.

While demand continues to outpace supply, the number of homes for sale is now recovering after a red-hot two years.

A bar chart showing house price growth slowing across regions in June 2022, compared to higher growth in March 2022 and lower annual average 2017-2022

The UK’s hottest housing markets in June 2022

Our House Price Index shows that the most affordable housing markets continue to make the fastest price gains.

Average home values are rising the fastest in Wales, up 11.1%. They remain in double digits in the South West and the East Midlands, too.

Looking at the UK’s largest cities, Nottingham boasts the strongest housing market, with annual house price growth of 10.7%.

Nottingham is followed closely by Bournemouth, up 10.2%, and Leeds, up 9.3%.

Outside of the largest cities, homeowners in Wigan, Greater Manchester are coming out on top in house price growth. If you own a home there, you’ll have seen an average rise of 11.8% year-on-year. 

Meanwhile, homeowners in Mansfield have seen an 11.6% rise in their house price and Warrington’s house prices are up 11.2%.

A map of the UK showing the regions and towns with strongest house price growth in the year to June 2022
Image: Zoopla

Where the housing market is cooler right now

House price growth has been slowest in the areas where prices are already high.

London is the UK’s most unaffordable housing market. This is limiting further price gains at the moment, and prices have risen just 4% year-on-year.

That figure drops to just 3% in the highest value markets in the capital, like Westminster, Camden and Southwark.

Some of London’s suburbs are performing better, with house prices in Barking and Dagenham and Havering rising by more than 7% in 12 months.

Meanwhile in Scotland, Aberdeen remains the only city that has experienced negative house price growth over the last 12 months, with house prices down -1.6%.

Where’s the market going in the next six months?

House prices went up 3.6% in the first six months of 2022. That figure’s likely to increase to 5% by the end of the year, thanks to continued demand.

That said, homeowners are not immune to the pending economic headwinds. 

There are signs that the recent strength of the market will weaken in the next few months.

We’re all feeling cost of living pressures, rising mortgage rates and a squeeze on disposable income. 

And these factors will all impact homeowners’ desire to move, which will become apparent later in 2022 and into the first half of 2023.

We expect to see a decrease in demand for homes in aspirational rural or coastal areas in the next few months.

House price growth has already started to slow at the Welsh/English border and Powys region (Llandrindod Wells, Shrewsbury and Chester), compared to June 2021.

And coastal areas like Truro in Cornwall, Torquay in Devon and Canterbury in Kent are also slowing down.

Buyer demand in these areas is now tracking up to -16%  below the five year average, and -22% or more below the July 2022 levels.

What does the latest house price data mean for you?

Will your home keep rising in value? Is now a good time to sell? Should you hold off from moving?

Find out what the latest data means for you and your home with opinion and advice from Richard Donnell, Executive Director of Research and Insight.