The September Halifax House Price Index showed that house prices experienced a slight fall in September, marking the second marginal decrease over the past three months
The annual rate of growth in house prices also fell further to 9.9%, down from 11.4%.
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.
11 out of 12 areas recorded slower growth than in August
Wales remains at the top of the table for annual house price inflation with a rate of +14.8%, down from +15.8% in the previous month, 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.
UK home sales increased in August 2022
UK seasonally adjusted residential transactions in August 2022 were 104,980 – up by 1.1% from July’s figure of 103,880. Quarterly SA transactions (June-August 2022) were approximately 4.2% lower than the preceding three months (March 2022 – May 2022).
The latest Bank of England figures show the number of mortgages approved to finance house purchases increased in August 2022, by 16.6% to 74,340. Year-on-year the August figure was 1.7% above August 2021.
The latest RICS Residential Market Survey in August showed a continued downward trend in demand and sales. The net balance score for new buying enquiries was -39%, compared to -26% previously, the fourth consecutive month in negative territory. Agreed sales have a net balance of -22% and new instructions returned a net balance score of -15%.
The pace of annual growth has slowed for the third month in a row
Kim Kinnaird, Director, Halifax Mortgages, said: “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.
Stamp duty and the cost of living crisis have contributed to pressure on house prices
“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.”
Industry comment
Commenting on the Halifax House Price Index for September, Stuart Law, CEO of the Assetz Group, said: “Today’s figures indicate that UK house price growth decreased slightly in September (-0.1%) compared to August (+0.3). As political and economic uncertainty continues, house prices will continue to be affected.
“With the ongoing cost-of-living crisis and mounting fears of a recession, we need to ensure there are sustainable levels of house price growth, so as to not price out potential buyers who are on the margins of being able to afford a home.
“Tax cuts, including to SDLT, will help many more people bridge the growing affordability chasm, but not for long if we don’t tackle runaway mortgage rates.
“The holy grail for the housing market is radical supply side reform so increased construction output can better meet national demand. But, even if the Chancellor delivers that later this month, history suggests it will be a challenge to get it past Conservative backbenchers.
“If a progressive planning reform package survives the House of Commons, it will still be tough for housebuilding to catch up, with demand set to grow even further as aspiring buyers find they have more money in their pockets than they expected.
“With a new austerity drive around the corner to pay for the Government’s tax cuts, we need to bring more private investors into the housing sector to drive the kind of growth the Prime Minister is hoping for and avoid a long-term housing affordability crisis. We’ve recently removed the queue to our access accounts precisely because we believe now is the time to encourage more private investors into the UK property sector, where there is a fantastic growth opportunity given the scale of demand for new housing.”
