No end in sight for housing crisis as prices rise at fastest pace since 2007, with biggest jump in Wales
Property prices across the UK rose at the fastest annual pace since 2007 in February, with the biggest jump in Wales.
Welsh property prices rose 13.8pc, up to an average £207,184. In England, the South West recorded large gains, with price inflation reaching 13.4pc.
The price rises come as the Welsh Government announced tough new restrictions designed to ensure that people are not priced out of their own communities.
Russell Galley, of Halifax, however said he expected growth to wane over the coming year due to inflation, partly as the war in Ukraine pushed up energy prices.
“Looking ahead, as Covid moves into an endemic phase and almost all domestic restrictions are removed, geopolitical events expose the UK to new sources of uncertainty,” he said.
“The war in Ukraine is a human tragedy, but is also likely to have effects on confidence, trade and global supply chains.
“Surging oil and gas prices are one immediate consequence, meaning that inflation – already at a 30-year peak – will remain higher for longer.
“These factors are likely to weigh on buyer demand as the year progresses, with market activity to return to more normal levels and an easing of house price growth to be expected.”
However, he added that the current rise was record-breaking, saying: “This is the biggest one-year cash rise recorded in over 39 years of index history.”
At 10.8%, the annual rate of house price growth across the UK was the strongest since June 2007, Halifax said. The increase took the average house price across the UK to a new record high of £278,123.
Karen Noye, a mortgage expert at wealth manager Quilter, said house prices had “shattered expectations”.
She said: “A convergence of factors may put the brakes on runaway house prices. Ultimately, 2022 could see prices slow significantly if not drop as the economy deals with the war in Europe. However, there simply is not enough stock. Until the shortfall is met house prices are likely to stay relatively high.”
Last week the Welsh Government announced that the maximum tax hike on second homes is set to be raised to a whopping 300%.
The move is to tackle the negative impact vacant houses, holiday lets and soaring property prices are having on local communities.
It is part of a series of measures set out in the Co-operation Agreement between the Welsh Government and Plaid Cymru.
Councils across Wales will be able set the premium at any level up to the maximum, from April 2023.
The maximum premium councils can charge at the moment is 100%, which means the new measure could lead to a possible tax rise of 200%.
It will be possible to apply different rates for second homes and long-term empty dwellings.
Plaid Cymru’s Lead Designated Member Sian Gwenllian MS said: “It is clear that we as a country are facing a housing crisis. So many people cannot afford to live in their local areas, and the situation has worsened during the pandemic.
“These changes will make a difference, enabling councils to respond to their local circumstances and start to close the loophole in the current law. It’s a first but important step on a journey towards a new housing system that ensures that people have the right to live in their community.”
Climate change minister Julie James said: “We want people to be able to live and work in their local communities, but we know rising house prices are putting them out of reach of many people, exacerbated by the cost-of-living crisis we are facing.
“There is no easy answer or quick-fix solution. This is a complex problem that requires a wide range of actions.
“We continue to carefully consider further measures that could be introduced, and these changes are the latest steps we are taking to increase the availability of homes and ensure a fair contribution is made.”
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