UK house prices grew at an annual rate of 2.2% in September, a slight increase from the 2.1% recorded in August, according to the latest Nationwide house price index. The index also shows that prices rose by 0.5% month on month once seasonal adjustments were applied.
Northern Ireland continued to lead the UK market with annual growth of 9.6%, while the outer South East was the weakest performer, posting just a 0.3% increase year on year.
By property type, semi-detached homes experienced the strongest growth, with prices up 3.4% compared to last year. Detached and terraced houses followed with increases of 2.5% and 2.4% respectively. Flats, however, recorded a small annual decline of 0.3%.
Nationwide’s chief economist Robert Gardner commented: “The broad stability in the annual rate of house price growth over the past three months mirrors that of activity. The number of mortgages approved for house purchase have been hovering at around 65,000 cases per month, close to the pre-pandemic average (despite the higher interest rate environment).”
He added: “Despite ongoing uncertainties in the global economy, underlying conditions for potential home buyers in the UK remain supportive. Unemployment is low, earnings are rising at a healthy pace, household balance sheets are strong and borrowing costs are likely to moderate a little further if Bank Rate is lowered in the coming quarters as we, and most other analysts, expect.”
“Providing the broader economic recovery is maintained, housing market activity is likely to strengthen gradually in the quarters ahead.”
Tomer Aboody, director at MT Finance, noted: “We are seeing that despite plenty of negativity surrounding current market conditions, buyers are still transacting, although in smaller numbers than historically. Due to less demand, price growth is minimal but still positive. With sentiment in the broader, macro market still uncertain, we could possibly see another rate cut in the next six months, which will give buyers even more encouragement.”
Tanya Elmaz, managing director of intermediary sales at Together, added: “A return in positive house price growth is a welcome sign following a few quiet summer months. The question of whether this growth is set to last, however, remains in doubt.” She continued: “While the Bank of England made a base rate cut in August, further rate cuts in the near future may be few and far between should inflation remain elevated. Whilst we at Together have just lowered rates on many of our products, the industry will need to see a bigger shift before rates are dropped widely and fixed-term borrowing becomes more attractive for consumers.”
“The property industry also remains in the dark over potential changes in the tax regime at the Autumn Statement. While rumoured tax changes, such as a potential property tax on houses worth over £500,000, will significantly affect the market, the uncertainty over what’s to come may keep activity subdued until more clarity is provided in the Budget.”
“Despite these challenges, there remain many opportunities for aspiring homebuyers and landlords looking to invest. Those keen to seize an opportunity and move forward with their property plans can consider the wide range of financial products available, like Shared Ownership mortgages, specialist buy-to-let mortgages, or bridging loans for fast, flexible finance.”
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Source: Mortgage Strategy
