The property market is bracing for the start of the slowdown in the rate of house price growth. The Halifax House Price Index for April showed average values were up 10.8% annually last month to a record £286,079. However, while prices rose for the tenth consecutive month by 1.1%, this was down from 1.5% in March and the annual growth rate has slipped from 11% in the previous two months. Halifax warned that the rate of house price growth is expected to slow as incomes are squeezed. Over the past year, prices for detached and semi-detached properties have risen by over 12%, compared to just 7.1% for flats, Halifax said. Commentators believe that for now, at least, despite the current economic uncertainty, the strong increases we’ve seen in house prices show little sign of abating. Demand in the housing market remains firm and mortgage servicing costs are relatively stable with fixed-rate deals making up around 80% of mortgages on homes across the industry, protecting many households from the effects of rate rises so far. However, the headwinds facing the wider economy cannot be ignored. 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.

Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of May 2022 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.