House prices hit new record but growth set to slow

The average UK house price hit a fresh record in April but growth is set to slow this year as inflation and interest rates rise.

The Halifax said house prices rose 1.1%, taking the average to £286,079.

While it said prices had grown for 10 months in a row - the longest run since 2016 - it said "the headwinds facing the wider economy cannot be ignored".

Hikes in the cost of living and higher interest rates will squeeze household budgets, the mortgage lender predicted.

Households on fixed-rate mortgages have been cushioned from rate rises so far, the Halifax said.

But Russell Galley, managing director at the Halifax said: "The house price to income ratio is already at its highest ever level, and with interest rates on the rise and inflation further squeezing household budgets, it remains likely that the rate of house price growth will slow by the end of this year."

In the short-term, housing market transactions and mortgage approvals are still above pre-pandemic levels, and the Halifax expects the market to remain buoyant for now.

Demand continues to outstrip supply of homes for sale and that is driving up prices, said the Halifax.