Insufficient supply of new houses coupled with a continued strong labour market and historically still low interest rates have combined to push annualised house price inflation to 17.8% in the latest monthly house price survey from Halifax.
The average house increased in value by 1.6% in February, sending the seasonally adjusted average price to £148,089. The Bank of England’s interest rate increases announced in November and January have had some impact on affordability, with the average share of household income needed to cover mortgage payments increasing to 15.5% from 13.9%. However, the average cost of mortgage debt as a proportion of income is still well below the long-term average of 21%, Halifax points out. The Bank of England's base rate would have to rise to 7.75% in order for mortgage debt as a proportion o...
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