According to the Halifax House Price Index, over the past 12 months prices for detached and semi-detached properties have gone up by over 12% compared to just 7.1% for flats.
For a detached home this equates to just under £50,000 in cash terms – five times more than the increase in on the average flat.
The data comes as Halifax revealed house prices have risen for the 10th consecutive month and the average property in the UK is now worth £286,079.
Over the year prices have climbed by 10.8% and in the last two years the average home has increased in value by £47,568.
Russell Galley, managing director at Halifax, said he expected house price growth to continue for the short term, at least but longer term it was not sustainable.
“Housing transactions and mortgage approvals remain above pre-pandemic levels and the continued growth in new buyer enquiries suggests activity will remain heightened in the short-term” he said.
“The imbalance between supply and demand persists, with an insufficient number of new properties coming onto the market to meet the needs of prospective buyers and strong competition to secure properties driving up prices.”
He added: “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.”
How will rising house prices impact mortgages?
According to mortgage experts, the increasing house prices combined with the cost-of-living crisis mean more buyers – especially those taking their first steps on the property ladder – will have lower deposits. And this will, in turn, drive up demand for mortgages for buyers with 5% to put down – in other words, 95% loan-to-value mortgages.
Amanda Aumonier, head of mortgage operations at online mortgage broker Trussle, said: “It’s only a matter of time until the cost of living crisis begins to catch up with the housing market.
“Households are beginning to feel the effect of inflation, higher energy bills and the soaring cost of living and so are cutting back on day-to-day essentials.
“This will likely get worse with increasing interest rates. This week’s interest rate rise could add an additional £340.56 to annual mortgage payments alone.
“Given that affordability and an inability to save large deposits is set to become the key factor preventing people moving homes, it is essential that mortgage products reflect this.
“In particular, high loan to value mortgages will be a lifeline for those unable to save during this difficult financial period. As it stands, there are only 56 95% mortgages available. As such, we would urge lenders to do all they can to responsibly look at introducing more high loan to value deals to the market so that everyone can aspire to own their own home.”
