Average house prices in the UK increased by 9.5% over the year to September 2022, down from 13.1% in August 2022, according to the latest ONS data.
The annual percentage change slowed this month because UK house prices rose sharply in September 2021, which coincided with changes to Stamp Duty Land Tax.
House prices remained unchanged between August and September 2022; this also caused the annual percentage change to slow.
The average UK house price was £295,000 in September 2022, which is £26,000 higher than this time last year, and unchanged since August 2022.
Average house prices increased over the year to £314,000 (9.6%) in England, to £224,000 in Wales (12.9%), to £192,000 in Scotland (7.3%) and to £176,000 in Northern Ireland (10.7%).
Conor Murphy, chief executive officer, Smartr365, said: “Despite recent headlines, buyers, sellers, advisers, and lenders all remain committed to pressing ahead with sales. This steady demand is supported by falling swap rates and average interest rates. Some 2 and 5-year fixed-rates are priced between 4 and 5%, down from the 6%+ seen in recent weeks.
“The hope is that tomorrow’s Budget also brings clarity and stability to the wider economy, in turn supporting the housing sector. First-time buyer demand has already been recently supercharged by the Stamp Duty Land Tax cuts confirmed last month, whether it gets a further boost tomorrow remains to be seen.
“What is certain though is the need to digitise and streamline the homebuying process, reducing admin, time, and stress for all parties. If brokers haven’t already integrated tech tools into their everyday work, they are a step behind competitors. There is no need to rely on photocopied ID or paper fact finds in 2022.”
Nathan Emerson, Propertymark chief executive, added: “Things are changing, and our members are seeing a steady shift back towards a buyers’ market with the biggest proportion of sales now being agreed at asking price or below.
“Demand is continuing to outpace supply and despite buyers negotiating harder with higher borrowing rates to consider, realistically priced homes are still selling.”
Further reaction
Iain Crawford, CEO of Alliance Fund:
“We’re yet to see any real signs of a notable drop in house prices despite a turbulent few months and now that the government has steadied the waters, any movement is likely to be a gradual return to normality rather than a sheer market crash.
Of course, tomorrow’s Autumn Budget could put the cat amongst the pigeons in this respect. While it looks as though residential homeowners and buyers won’t feature directly, the nation is bracing for further tax hikes. Any dent to our post tax income is likely to further impact our ability to borrow and buy, which will translate to an overall reduction in market sentiment.”
Director of Benham and Reeves, Marc von Grundherr, commented:
“The property market has continued to weather the storm of late and while we may have seen a reduction in buyer demand due to higher mortgage rates, we’re simply not seeing any downward pressure applied to sold prices, despite a static rate of growth on a monthly basis.
This is largely due to the fact that buyers have been keen to transact at pace in order to secure the rates currently on offer, before they climb even higher. In doing so, they’ve helped to maintain a consistent level of activity in the process which has kept the market afloat.”
James Forrester, managing director of Barrows and Forrester:
“It’s incredibly hard to gauge the true health of the UK property market at present, with increasing mortgage rates leading to a period of turmoil, followed by a renewed level of certainty as a result of a government refresh.
That said, there remains a large degree of economic instability and this week’s Autumn Budget may well add to this.
At the same time, we can expect two things come December. Mariah Carey in the music charts and the usual seasonal slowdown in property market activity.
As it stands, the property market remains resolute, but we will have a much clearer view of things come 2023.”
Chris Hodgkinson, managing director of HBB Solutions:
“All current indicators suggest the market is starting to freeze over with homebuyers giving the idea of homeownership the cold shoulder following a sizeable uplift in the cost of borrowing.
This declining level of buyer demand is yet to cause house prices to actually fall, but the tide is starting to turn, and with the market now slowing right down until spring we can expect property values to follow suit sooner, rather than later.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman:
“’”This most comprehensive of all the housing market surveys, though a little dated, confirms what we are seeing at the sharp end. Prices continue to be supported by lack of stock as buyers seek to take advantage of competitive mortgage rates before fallout from the mini-Budget pushed them higher.
“However, worries about further rises in inflation and potential implications arising from the Autumn Statement are contributing to a reduction in new business.”
Mark Harris, chief executive of mortgage broker SPF Private Clients:
“The uptick in inflation to 11.1% will do nothing to calm borrower concerns about rising interest rates.
“However, while Base Rate is expected to continue rising, the longer-term picture has changed and the peak is unlikely to be as high as recently feared.Gilt yields have fallen, thereby allowing some cheaper mortgage products to be released into the market, which is encouraging for hard-pressed borrowers.
“We expect fixed-rate mortgages to come down in price further as the cost of funds falls, servicing pressure subsides and lenders attempt to originate new business.’
Vikki Jefferies, proposition director at PRIMIS Mortgage Network:
“Today’s figures reflect a cooling in the rate of house price growth, although it’s a testament to the strength of the mortgage market that figures still remain above pre-pandemic level and demand for properties remains healthy.
“With lenders now reinstating products, having pulled many in response to the mini-budget, independent advice will be essential to homebuyers looking to navigate the ever-changing mortgage product landscape.
“For buyers and remortgagers trying to determine which product will work best for them in the current environment, brokers are invaluable in providing the tailored guidance needed to help make the right decision.”
Malcolm Webb, technical director at Legal & General Surveying Services:
“Today’s data suggests that house prices are certainly starting to plateau, with consecutive rate rises and wider economic pressures applying the brakes on some of the momentum of the last two years.
“However, the market is currently something of a mixed bag. Property prices are still higher than they were at the same point last year and the slowdown that we’re seeing remains modest.
“Coupled with the shortage of available housing stock, market activity remains steady.
“Tomorrow’s Budget statement should provide further details on the government’s ambitions for the housing market, but even without further changes, prospective buyers are likely already putting their own finances under the microscope.
“Borrowers will be aiming to investigate all potential options to facilitate such a massive purchase and futureproof it against any unexpected problems or rate hikes.
“As such, advisors are more important than ever for buyers in the current climate. A thorough property survey is also as valuable as it has ever been in the bid to avoid unexpected repair costs further down the line.”
