UK housing market remains robust despite headwinds
The latest House Price index released by the government for August 2022 has shown an increase in house prices, as demand continues to exceed supply.
Although the annual growth was slow compared to August 2021’s stamp holiday changes, the average UK house price has risen by £36,000 compared to last year, reaching £296,000. The regional breakdown of average house prices also showed an increase across the board.
According to the data revealed via a press advisory, in England, the house prices have risen by 1 percent since July 2022. The annual price rise of 14.3 percent takes the average property value to £315,965.
The regional data for England indicates that:
the East Midlands experienced the greatest monthly rise with an increase of 2.3 percent.
the West Midlands saw the lowest monthly price growth, with a movement of -0.2 percent.
the South West experienced the greatest annual price rise, up by 17 percent.
London saw the lowest annual price growth, with a rise of 8.3 percent.
What this means is that the house prices in England rose by 14.3 percent to £316,000, whereas the prices in Wales rose by 14.6 percent to £220,000. Conversely, Scotland saw an increase of 9.7 percent to £195,000 and to £169,000 in Northern Ireland (9.6 percent).
According to the report, London shows, on average, house prices have risen by 0.9% percent since July 2022. An annual price rise of 8.3 percent takes the average property value to £552,755.
Price change by region for England. Source: HM Land Registry
Despite the economic turmoil since the government’s mini-budget last month, there has been little immediate sign of the housing market slipping, according to Rightmove. The property portal said that the average price of a property coming to market this month was up 0.9 percent, to a new record of £371,158, slightly below the average increase for the time of year.
Nonetheless, industry reports indicate that estate agents across the UK have seen a steep reduction in interest and offers from potential homebuyers in the past few weeks after interest rates soared after the Government’s mini-Budget. It may be recalled that potential homebuyers have faced growing uncertainty since the end of September when the Bank of England raised its interest rates in response to the budget. Lenders pulled mortgage products from the market and some hiked their rates to over six per cent.
Agents described seeing decreases of about 50 per cent in the number of house viewings and enquiries after the increase in mortgage costs, which “spooked” buyers. Others have predicted that the market will soon decline, with Halifax reporting a marginal decrease in sold prices in September, and surveyors RICS tipping the end of the 13-year UK housing boom next year.
It is believed that the buyers who have remained active in the market are buyers who have their finances in place. Industry pundits on the other hand have paint a grim picture of the country’s housing market and predict that house prices across the UK could be about to fall significantly as inflation squeezes households finances and rising interest rates impact the amount people are able to borrow.
“What’s going to happen to house prices is understandably on the minds of many home-movers right now, especially after the market uncertainty after the government’s mini-budget. There has been no immediate effect on prices, but the trend of a slight softening in the pace of growth continues”, said Tim Bannister Rightmove’s director.
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