Halifax: Annual home price growth slows to 11.5%

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However, despite some warmth from the pace of growth, first-time buyers will not yet feel like celebrating as the latest figures show the price of a typical UK property has hit a new record high and now stands at £294,260.

Real estate prices of regions and countries

Wales remains at the top of the chart for annual house price inflation, up +16.1%, the highest level of growth since the start of 2005. This means that average prices have risen by £31,246 over the past year, with the average property now costing £224,858.

The South West of England also continues to experience strong annual growth, up +14.5%, with an average property cost of £313,003.

The annual growth rate in Northern Ireland fell further last month to +12.5%, with a typical house now costing £185,505.

Scotland also saw a further slowdown in the annual house price inflation rate, to +9.4% from +9.5%. A Scottish house now costs an average of £204,362, another record for the country.

As London continued to lag behind other countries and regions, the annual house price inflation rate in London rose again to stand at +8.8%, its highest level in more than six years. With a typical property costing a record £554,718, the average house price in the capital has risen by £44,669 over the past 12 months.

Kim Kinnaird, Director, Halifax Mortgages, comments: “The slight fall in average house prices in July (-0.1%) was offset by a return to growth in August – although the rise (+0.4% month on month) was relatively modest compared to to the rapid inflation we have been witnessing lately. Over the past year, the monthly house price inflation rate has averaged around
+0.9%.

“Typical house prices hit a new record high in August (£294,260) – as they have in seven of the eight months so far this year. However, the annual growth rate fell to +11.5%, from +11.8% in July, its lowest level in three months.

“While property prices have so far proved resilient in the face of growing economic uncertainty, industry surveys indicate cooling expectations in the majority of parts of the UK, as demand Buyers are declining, and other forward-looking indicators also imply a likely slowdown in market activity.

“First, there’s the huge hit to people’s incomes from the cut in the cost of living. The 80% rise in the energy price cap in October will put more pressure on household finances, as will further increases planned for January and April. At projected levels, this will likely limit the amounts potential buyers can afford to borrow, in addition to the negative impact of higher energy prices on the wider economy.

“While government policy intervention may counter some of these impacts, borrowing costs are also expected to continue to rise as the Bank of England is expected to continue raising interest rates next year.

“With house price-to-affordability ratios already historically high, a more difficult period for house prices is to be expected. However, this must be seen in the context of the exceptional growth observed in recent years, prices average homes having risen by more than £30,000 in the past 12 months alone.

Tom Bill, Head of UK Residential Research at Knight Frank, commented: “The supply of homes tightened over the summer as more people took summer vacations for the first time in three years, which kept prices up. We expect that more properties will be listed in the coming weeks as we move from a seller’s market to a buyer’s market.With rising mortgage rates, this will increase the downward pressure on prices after they seemed to defy gravity for so long.

Nathan Emerson, CEO of Propertymark, comments: “Pre-pandemic seasonal trends are reappearing as the summer lull continues in the market. However, buyer confidence remains strong, pushing the average time to sell to record highs of over four months.

“The broader economic climate and rising energy costs have meant buyers are negotiating harder and more buyers each month are beginning to secure homes below the asking price.

“The number of properties coming onto the market is fairly static and interest rates remain at historically low levels despite recent increases, so we expect property prices to continue to slow in growth month on month. another but will not drop significantly until the end of the year.”

Mark Harris, managing director of mortgage brokerage SPF Private Clients, says: “With markets betting on another rate hike this month, the incentive for borrowers to move quickly to secure a competitive deal continues.

“Lenders have money to lend and are keen to lend although volume management is the name of the game. There are still good deals to be had although rising energy bills are impacting affordability calculations and that lenders expand their policy for high-income households accordingly.”

Jeremy Leaf, North London estate agent and former RICS residential chairman, says: “While we have noticed that end prices and activity have softened a bit, the resilience of the market continues to defy the almost daily predictions of a slump.

“Worries about the rising cost of living, successive interest rate hikes and the possibility of a recession next year have not been enough to cause a correction when such a large lag between the demand and supply remains, although prices may be more sensitive.”

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