UK house prices hit record high of £369,968 in July

House prices A man walks past houses painted in various colours in a residential street in London, Britain, May 15, 2019. REUTERS/Toby Melville
House prices: The average price of property coming to market this July rose by £1,354. Photo: Toby Melville/Reuters

The average UK house price hit a new record high of £369,968 in July but the market is slowing amid the cost of living squeeze.

The average price of property coming to market saw a sixth consecutive record this month, rising by 0.4%, or £1,354, according to property site Rightmove.

Houses in Camden saw the biggest monthly increase across all of London, with properties in that borough coming into the market with a £1,031,999 average price tag. That is a 3.3% increase from June prices.

Upscale Kensington and Chelsea remains the most expensive area to own a house, with average prices of £1.6m.

Read more: UK house prices to keep climbing despite drop in buyers

Harrow saw property prices go down slightly, with a house there costing on average £630,998, a 1.3% drop compared to June.

Looking across the UK, Scotland saw prices drop 0.7% to an average of £185,360. House prices in Wales also dipped, retreating 2.9% to £255,713.

The North East remains one the cheapest regions to buy a property, with average prices hovering around £183,000.

Buyer demand is now 26% higher than at the same time in 2019 as a desire to move and low numbers of homes for sale are driving further price growth.

The research showed that there are simply not enough homes coming to market to correct the balance between supply and demand.

There has been an uptick in the number of new sellers but the number of available homes for sale is still 40% down on where it was in 2019.

“Having more new sellers this month is a win-win for the market, as these sellers will likely achieve good prices for their homes given the sixth asking price record in a row that we’ve now seen, which may help to explain the increase in new stock coming to market over the last year,” Rightmove’s director of property science, Tim Bannister, said.

Read more: Interest rate rises to hit 40% of UK mortgages, warns Bank of England

Rightmove is now expecting house prices to climb 7% before the end of the year.

“A softening in demand is moving the market from a boil to a simmer, it remains 26% up on 2019. With such an imbalance remaining between supply and demand, prices look underpinned, and we would therefore only expect typical smaller seasonal month-on-month falls, rather than more significant price falls in the second half of the year.

"This has led to us revising our annual price growth prediction for the end of the year from 5% growth to 7%, although this would still mark a slowing from the 9.3% seen this month,” Bannister added.

Interest rate rises and record prices mean that the average first-time buyer monthly mortgage payment for someone taking out a two-year fix is now 20% higher than at the start of the year, now standing at £976 per month.

UK interest rates
UK interest rates

With the Bank of England hiking interest rates to rein in inflation, many first-time buyers are looking to lock in a longer fixed-term mortgage rate.

Rightmove said this is even more likely because the gap between interest rates for shorter and longer term mortgages has been closing in recent years, and they are now virtually the same.

The average interest rate for a 75% loan-to-value mortgage is now 2.9% for either a two-year or five-year fixed deal. Historically lenders offered a lower rate on a two-year fix, with a difference of as much as 1% between the two deals over the past five years.

“The challenges presented by rising interest rates and the cost of living will no doubt have an effect throughout the second half of the year, as some people reconsider what they can afford.

“Given the political and economic uncertainty at the moment, those who want to move this year, particularly first-time buyers, may seek some financial certainty by locking in longer fixed-rate mortgage terms now before their monthly outgoings increase again,” Bannister said.

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