Halifax says house prices could be reaching unsustainable levels as property prices soar despite EU referendum

Jake Cordell
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Demand still outstripped supply in the UK housing market
Demand still outstripped supply in the UK housing market (Source: Getty)

There were no surprises in the latest numbers on house prices, released this morning - they are still going up.

The average house was worth £213,472 in the three months to May, according to the Halifax house price index, 9.2 per cent more than the same period last year. The bank said the same old story - weak supply and high demand - had pushed house prices up by near double-digit rates as they warned house price growth could be reaching unsustainable levels.

Read more: Winners and losers in the London housing market

The average property price increased by £1,268 over the last month and by £17,043 - more than the annual pre-tax income from a full-time job paying the minimum wage - in the last year.

"Low interest rates, increasing employment and rising real earnings continue to support housing demand," said Martin Ellis, a housing economist at Halifax.

"The strength of demand, combined with very low supply, is causing house prices to rise at a brisk pace."

However, as the cost of owning a home far outpaces growth in average wages, Halifax warned "increasing affordability issues ... should curb housing demand and result in some slowdown in house price growth as the year progresses."

Jeremy Duncombe, director of the Legal and General Mortgage club, said: "Whilst some may view rising house prices as something to cheer about, this relentless climb is actually bad news for aspiring homeowners across the country."

The research also showed that the slight dip in house prices registered in April was nearly completely reversed in May. Prices dropped 0.8 per cent in April following the rush to buy second homes and buy to let properties in March caused by stamp duty changes, but recovered by 0.6 per cent in May.

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