Average UK house price hits £286,000 but market is losing steam

The average price paid for a house in the UK increased 3.5% in April to £286,000 – some £9,000 more than a year ago – but the growth rate is slowing down, according to official figures.

The latest house price data from the Office for National Statistics (ONS) shows a 3.5% price increase in the 12 months to April. Despite the increase, prices are still £7,000 below the September 2022 peak and are slowing down when compared to the 4.1% increase in March this year.

Average house prices increased over year to £306,000 in England (3.7%), £213,000 in Wales (2.0%), £187,000 in Scotland (2.0%) and £172,000 in Northern Ireland (5.0%).

The North East saw the highest annual percentage change of all English regions in the 12 months to April 2023 (5.5%), while London saw the lowest (2.4%).

Read more: Bank of England likely to raise interest rates to 5% after inflation shock

ONS head of Housing Market Indices, Aimee North, said: “Annual house price inflation slowed again in April across most UK nations and regions. The North East showed the highest annual growth, while London remains the slowest growing English region.

“UK rental prices continue to climb reaching another record high in May, with the West Midlands showing the highest annual percentage change in England. London’s rental growth also continued to surge seeing its highest annual rate in over a decade.”

London's average house prices remain the most expensive of any region in the UK, with an average price of £534,000 in April.

Karen Noye, mortgage expert at Quilter, said: "Considering the mortgage storm that is currently battering the country, this is likely the last time we will see an increase in prices for some time. This morning’s flat inflation figure will have been exactly what mortgage borrowers didn’t want to see as those with low-cost deals will be bracing for their mortgage deals to come to an end and sadly find that their monthly payments skyrocket.

"The ultimate impact of this is that there is now a real risk of people falling into arrears."

The figures come as UK fixed-term mortgage rates have climbed again, adding to concerns about a “timebomb” in the housing market.

The average 2-year fixed residential mortgage rate has risen to 6.15% today, data provider Moneyfacts reports, up from 6.07% on Tuesday.

At the start of May, two-year fixed mortgages were averaging 5.26%, before starting to climb as financial markets became concerned that UK inflation was looking sticky.

The average 5-year fixed residential mortgage rate jumped to 5.79%, up from 5.72% yesterday.

Read more: Inflation stuck at 8.7% as cost of living squeeze continues

Expert Martin Lewis has warned millions of homeowners that a “mortgage ticking time bomb” has exploded with “millions facing huge bill-shock as their fixes end.”

Around 2.4 million fixed-rate mortgages are due to end between now and the end of 2024, according to figures from UK Finance.

Many of these homeowners could be in for a bill shock when they come to remortgage, having been used to paying significantly lower rates.

According to the Resolution Foundation think-tank, annual mortgage repayments are set to rise by £2,900 for the average household remortgaging next year.

Myron Jobson, senior personal finance analyst at Interactive Investor, said: “The storm clouds are gathering over the property market which has suffered a triple whammy of negative developments, with house prices, mortgage approvals and transaction volumes all on the wane.

“The market is clearly turning. House prices remain squarely on the downwards trajectory as the impact from the affordability squeeze from high mortgage rates and high inflation continues to filter through.

Meanwhile, private rental prices paid by tenants in the UK increased by 5.0% in the 12 months to May 2023, according to the ONS.

That is the largest annual percentage change since the data series began in January 2016.

The ONS said that rental prices in London grew at the fastest rate in a decade.

"In the 12 months to May 2023, rental prices for the UK (excluding London) increased by 4.9%, up from an increase of 4.8% in the 12 months to April 2023.Private rental prices in London increased by 5.1% in the 12 months to May 2023, up from an increase of 5.0% in the 12 months to April 2023. This is the highest annual percentage change in London since October 2012."

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