House prices in Britain hit a new high over the year to April but as the country's economy comes under increasing strain, could the property bubble be about to burst?
Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com, thinks so.
Mr Cox believes house prices are "long overdue a correction" and has warned there is a risk of the market collapsing later in 2022.
"The housing market is a house of cards which could soon collapse," he said.
Average house prices increased by 12.4% in the 12 months to April - up from 9.7% in March 2022 - new data from the Office for National Statistics (ONS) shows.
The average UK house price was £281,000 in April - £31,000 higher than this time last year. In England, average house prices increased over the year to £299,000 (11.9%); in Wales to £212,000 (16.2%); in Scotland to £188,000 (16.2%); and in Northern Ireland to £165,000 (10.4%).
Mr Cox said the Government, Financial Conduct Authority (FCA) and Bank of England are all "desperate" to prevent a collapse in the market, however.
"Almost at any cost it seems," he said. "Hence why the FCA have just announced the removal of the affordability stress test, why Rishi Sunak introduced the stamp duty holiday, and why the Bank of England seem petrified about raising the base rate too far."
Mr Cox's warning comes as inflation - the increase in the cost of goods and services - rose again in May, remaining at 40-year highs and deepening the squeeze felt by UK households. The rate of consumer prices index (CPI) inflation rose from 9% in April to 9.1% in May, the ONS said.
Robert Payne, director of Bristol-based Langley House Mortgages, believes the property market will ride out the uncertainty.
He said: “The unsettling combination of inflation, rate rises and the war in Ukraine certainly suggests we are heading towards a concerning climax but the property market has continuously shone through the face of uncertainty and my prediction is that we will see more of the same."
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said although house price rises are still "unusually high", the direction of travel of the property market is "worth keeping an eye on".
She added: "There’s every chance we will see more weakness in the May figures. Both the Nationwide and Halifax indices now run to May, and both have fallen back."
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