Nations and regions' house prices
Halifax figures have revealed that there are now four UK nations and regions which have seen annual house price inflation fall to single-digit levels: Eastern England, Greater London, the North East and Scotland. Perhaps more notably, 11 out of 12 areas recorded slower growth than in August (the exception being the North East).
Wales, however, remains at to the top of the table for annual house price inflation with a rate of +14.8%, although this too is down from
the previous month (15.8%), and an average property cost of £224,490.
The West Midlands has now overtaken the South West to record the strongest rate of annual growth in England, with house prices rising by +13.3% over the last year, down slightly from +13.5% in August. In cash terms, prices have risen by £30,000 over that period, with an average property now costing £255,822.
The pace of annual house price growth in Northern Ireland eased back further last month to +10.9% from +12.5%, with a typical home now costing £184,570.
Scotland also saw a further slowdown in the rate of annual house price inflation, to +8.5% from +9.3%. A Scottish home now costs an average of £204,305, largely unchanged from the previous month.
London still has the slowest rate of annual growth amongst the UK nations and regions, with house prices rising by +8.1% over the last year. Though with a typical home costing £553,849 the capital’s average property price remains by far the most expensive in the country.
Kim Kinnaird, Director, Halifax Mortgages, comments: “The average UK house price experienced a slight fall in September (-0.1%), the second marginal decrease over the past three months. The cost of a typical home edged down a little to £293,835 from the previous month’s record high (£293,992). The pace of annual growth also slowed for the third month in a row, to +9.9% from +11.4%, returning to single digits for the first time since January.
“The events of the last few weeks have led to greater economic uncertainty, however in reality house prices have been largely flat since June, up by around £250. This compares to a rise of more than £10,000 during the previous quarter, suggesting the housing market may have already entered a more sustained period of slower growth.
“Predicting what happens next means making sense of the many variables now at play, and the housing market has consistently defied expectations in recent times. While stamp duty cuts, the short supply of homes for sale and a strong labour market all support house prices, the prospect of interest rates continuing to rise sharply amid the cost of living squeeze, plus the impact in recent weeks of higher mortgage borrowing costs on affordability, are likely to exert more significant downward pressure on house prices in the months ahead.
“This will undoubtedly be a cause of some concern for homeowners, but the unprecedented rate of property price inflation we’ve seen in recent years has been far above the historic average. It’s important to look at slower growth in this context – since the start of the pandemic average property values have risen by around +23% (almost £55,000) with detached house prices up by more than £100,000 over the same period.”
Matthew Thompson, Head of Sales at Chestertons, says: “The expectation that London’s property prices could see an adjustment has led to an uplift in buyer demand across the capital last month. Compared to August, there were 17% more buyer enquiries in September and 18% more viewings.
"We are also encountering an increasing number of house hunters who want to secure a property as soon as possible and take out a fixed rate mortgage. This has contributed to September’s property market remaining busy and competitive. As the cost of living crisis is looming, some buyers are compromising on their priorities in order to secure a property under their initial budget.”
Emma Cox, MD of Real Estate at Shawbrook, comments: “High inflation and a surge in interest rates have created a challenging backdrop for prospective house buyers.
“While the introduction of a stamp duty cut on properties up to the value of £250,000 may offer a glimmer of hope for people currently in the process of purchasing a property, many will be waiting to see which way the wind turns before committing to buy.
“Against an uncertain political and economic backdrop, house prices are likely to continue to be affected, at least in the short term. More needs to be done to alleviate the cost of living concerns and restore consumer confidence, on top of solving long-term supply issues.
“With many still reliant on the private rental sector, it's vital that landlords are supported and encouraged to provide quality, safe and sustainable properties.”
Avinav Nigam, co-founder of real estate investment platform, IMMO, says: "The slowdown in house price growth for September was expected as higher interest rates in May and June kicked in, which feed through to transactions data now due to the time lag of conveyancing. We are seeing property listings falling by 15 to 20 per cent in some parts of the UK, as uncertainty encourages property owners to delay transaction decisions.
"The rapid pace of growth we have seen in recent years is coming to an end, partly due to recent interest rate hikes by the Bank of England and the crash of the pound following the government's mini-budget.
"It's predicted that house prices could correct by as much as 7 to 10 per cent in coming months. However, we don't expect a house price growth reversal to improve the affordability of housing due to fast-rising interest rates. Mortgage lenders are starting to require consumers to prove they can afford 7 per cent interest rates, as an indication of where rates could go.
"As it becomes harder and more expensive to buy, we will see consumer demand shifting even more towards renting. The trouble is that the supply of rental housing is also falling. There's a growing need for a professional provider to offer safe, quality and affordable rental housing for the UK."
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "General lack of supply continued to drive price increases in September, while the weak pound stimulated investment in London, although there are signs that the market is now slowing.
"While the turmoil of the past couple of weeks will go down in the history books, the money markets seem to have settled a little. More clarity from the government supported by data from the Office for Budget Responsibility will help us get back to a normal functioning market where all lenders can offer a full range of mortgage products.
"It is important to reiterate that the mortgage market is still open for business. Pricing is more expensive than it was but there are plenty of innovative products available that can help first-time buyers boost their deposit and/or affordability, making that dream of buying their first property more within reach than they may think.
"Speaking to an independent mortgage broker will help buyers navigate the options available, finding a mortgage suitable for their requirements."
Jeremy Leaf north London estate agent and a former RICS residential chairman, says: "New buyers are pausing for breath while they consider the likely pace and size of future interest rate hikes, so activity is reducing. The question is whether worries about rising mortgage payments outweigh the benefits of the recent stamp duty reduction, particularly for first-time buyers.
"The mini-Budget sparked a chain reaction of unintended consequences raising buyer concerns that any savings in stamp duty and other taxes would be more than offset by mortgage rates rising much more quickly and higher than expected."
Nathan Emerson, Chief Executive of Propertymark, said: “As we can now see, buyers coming to the market are being much more sensible with their cash and budget decisions and are analysing the market and taking their time in moving so we will continue to see this being reflected in the prices being achieved.
"Our member agents have told us that they are seeing mortgage in principle offers expire before the completion of a property. Due to interest rate rises, this is then causing some buyers' monthly payments to increase and is showing signs of re-negotiations.
"With prices inflating over 20 per cent in the last two years, witnessing a decrease isn't as majorly concerning as it sounds."
