House prices hit a new record in June, Halifax said, despite expectations that the rising cost of living in the UK would dampen demand.
The mortgage lender said the average house price hit £294,845 in June after rising 1.8% – the steepest monthly rise since 2007.
Halifax said a shortage of homes for sale has pushed prices higher, as has a shift toward people buying larger, detached homes.
But she expects price growth to slow.
Halifax said the housing market has so far been largely insulated from the rising cost of living.
“This is partly because the rise in the cost of living is currently being felt the most by lower-income people who are typically less active in buying and selling homes.
“By contrast, higher earners should be able to use additional funds saved during the pandemic,” it said.
Demand for larger single-family homes lifted prices for those properties by 13.9% last year, compared to a 7.6% increase for apartments.
However, Halifax expects the “increased pressure on household budgets from inflation and higher interest rates to weigh more heavily on the housing market given the impact on affordability.”
“Although it could come later than previously expected, a slowdown in property price growth should still be expected in the coming months.”
The Bank of England has announced a series of rate hikes in recent months in an attempt to curb rising inflation.
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