Is Your Home Earning More Than You?

Homes earn more than their owners as double-digit price rises to grip the market amid fears of a slowdown as the cost of living crisis bites.  

The average salary at the start of the year was £24,600, according to HM Revenue and Customs (HMRC) - a 6.3 per cent year-on-year increase. 

However, house price data for April 2022 from the Office for National Statistics, banks and building societies for the same period show homeowners and landlords gained an average of £31,000 in capital appreciation for each home they owned. 

The Halifax echoed the findings while reporting price rises for the eleventh month. Britain's biggest mortgage lender, the bank, reported a £2,857 increase in value between April and May, pushing the price of an average home to a record £289,099. Managing director Russell Galley explained that although prices had increased 10.5 per cent in the past year, this was the slowest growth rate.

Household budgets squeezed

Nationwide reported a similar trend, with data showing house prices up 0.9 per cent in May and 11.2 per cent in the year - a drop from 12.1 per cent a month earlier.

"Despite growing headwinds from the squeeze on household budgets due to high inflation and a steady increase in borrowing costs, the housing market has retained a surprising momentum. Strong labour market conditions are supporting demand. At the same time, the stock of homes on the market has remained low, keeping upward pressure on house prices," said Robert Gardner, the building society's chief economist.

The latest ONS report for April put the annual house price rise at 12.4 per cent year-on-year. Looking at the state of the market, the Royal Institution of Chartered Surveyors (RICS) reports the number of new buyers has edged up in past weeks, but prices remain buoyant due to a lack of choice of homes to buy. But the house price slowdown is forecast to continue as mortgage interest rates rise and the economy worsens due to increasing energy and food prices stoking inflation.

House prices by region - April 2022

House prices continue to rise the most in the South-West, with an average 14.1 per cent increase across the year. London house prices grew the least - by 7.9 per cent, up from 4.9 per cent in March - but despite the low increase, homes in the capital remain the most expensive at an average of £530,000. 

The cheapest is in the North East, where prices average £155,000.  

House price history for your neighbourhood

Use this interactive map to assess how your property investments have performed. Input the town name, and the map does the rest.  

Source: ONS and Land Registry

House Price Digest FAQ

The figures for average house prices and movements in property values can be confusing if you don't know how to read the data. Here are some of the most asked questions about house price indices.

Why are the average property prices different in each report?

The reports use different data to draw conclusions and take the data from different periods. Nationwide and Halifax base their indices on customer data, which are much smaller samples than the national data analysed by the ONS. Acadata's methodology includes analysis that no other index uses. Each organisation collects data over different periods, making a direct comparison difficult.

What is the average house price?

There's no such thing as an average home. The figure is calculated from the total value of all transactions in the sample divided by the number of homes changing hands.

Which house price index is the best?

All have flaws because of the restricted data, but the one with the broadest sample comes from the ONS. Unfortunately, the ONS data is usually the last to market and out of date by two to three months on publication.