House prices – Forbes Advisor UK

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7 Sept: Halifax Sees Steep Fall As Bank Offers Glimmer Of Hope

• Prices down 4.6% year-on-year – biggest drop since 2009
• Average house price falls to £279,569
• Bank of England suggests rates near peak of cycle

House prices plunged 4.6% in the year to August, the biggest annual drop in 14 years. 

The figure, contained in the Halifax house price index out today, marks a significant increase on the 2.5% annual fall recorded in July, suggesting higher mortgage costs are suppressing buyer demand.

The news comes the day after the governor of the Bank of England, Andrew Bailey, told MPs that he believes the UK is “much nearer” to the top of the interest rate cycle, fuelling hope that the Bank Rate may stabilise at its current 5.25%.

The Bank’s next announcement on the rate is on 21 September. Mr Bailey said a decision about whether to hold it at 5.25% or increase it further will be taken nearer the time, but the recent rapid decline in the rate of inflation – down to 6.8% in July from 7.9% in June – makes the former course of action a realistic prospect.

The Office for National Statistics releases the next batch of inflation data on 20 September, the day before the Bank’s decision is revealed.

The Bank Rate heavily influences mortgage rates, meaning the housing market will likely react strongly to positive news on borrowing costs.

According to Halifax, average UK house prices, now at £279,569, fell by 1.9% month-on-month, the largest such fall since November 2022. 

Prices are down by around £14,000 compared to this time last year and are now back at levels seen in early 2022. But they remain around £40,000 higher than pre-pandemic levels.

The south of England, London and Wales have seen the biggest falls in property prices, while Scotland is showing greatest resilience.

Kim Kinnaird, director, Halifax Mortgages, said: “Market activity levels slowed during August, and while there is always a seasonality effect at this time of year, it also isn’t surprising given the pace of mortgage rate increases over June and July. 

“We expect further downward pressure on prices through to the end of this year and into next, in line with previous forecasts. While any drop won’t be welcomed by current homeowners, it’s important to remember that prices remain some £40,000 (17%) above pre-pandemic levels. 

“It may also come as some relief to those looking to get onto the property ladder. Income growth has remained strong over recent months, which has seen the house price to income ratio for first-time buyers fall from a peak of 5.8 in June last year to now 5.1. 

“This is the most affordable level since June 2020, and will be partially offsetting the impact of higher mortgage costs.”

Nations and regions

Prices have fallen in all nations and regions of the country in the past year. But the South, London and Wales have seen the largest annual falls. In contrast, Scotland has seen average prices fall less steeply.

House prices have fallen by 5.0% on an annual basis in the South East (average house price is £379,565), by 4.7 in Wales (average price now £212,967) and by 4.4% in the South West (average prices at £298,496). 

In Greater London prices have typically fallen by 4.1% annually, putting the average house price at £529,814.

In Scotland property prices fell by just 0.6% over the last year, the slowest pace of decline in the UK (average house price £201,932).

The North East has also seen less steep price falls with an annual change of 1.2% (average house prices are £167,249).

Alice Haine, personal finance analyst at Bestinvest, said: “This is the steepest decline in prices since November last year with prices dropping about £5,000 on July – no surprise when you consider affordability is now being squeezed to the max by escalating mortgage rates, with buyers struggling to purchase the homes they want, and more sellers accepting offers below the asking price.

“Mortgage rates may have eased, but that won’t solve the financial pain many prospective buyers and existing homeowners are already facing. Improving mortgage rates and falling inflation may do little to soften the affordability challenge for new and existing borrowers, who must prove to lenders they can comfortably meet higher repayment levels.”

1 Sept: Prices Plunge At Fastest Rate Since 2009 – Nationwide

• Prices down 5.3% year-on-year in August
• Month-on-month decrease of 0.8%
• Average UK property now at £259,152

House prices plummeted by 5.3% in the year to August 2023, according to Nationwide’s latest house price index, their largest fall since July 2009, writes Laura Howard.

The drop in the annual figure, the eighth consecutive fall recorded this year by the building society, wipes an average £14,600 off the value of a typical UK home which is now worth £259,152. 

By contrast, in July and August last year, annual house price inflation was running at 11% and 10% respectively, according to the lender’s own figures.

In recent months, buyer demand has slumped in response to sky-high mortgage rates and persistently high living costs.

Robert Gardner, Nationwide’s chief economist, said the softening was ‘not surprising’ given the rise in borrowing costs in recent months, which has resulted in activity in the housing market running ‘well below pre pandemic levels’. 

He said mortgage approvals have been around 20% below the (pre-pandemic) 2019 average in recent months. In the first half of 2023 the number of completed housing transactions was also nearly 20% below pre-pandemic levels. 

Compared to the first half of 2021, when borrowing costs were ultra-low, a stamp duty holiday had been introduced by government, and more people were changing their housing preferences due to the effects of the pandemic, transactions are around 40% lower.

According to Mr Gardner, however, a ‘relatively soft landing’ is still achievable, providing broader economic conditions evolve in line with expectations from Nationwide and other forecasters.

He said: “In particular, unemployment is expected to remain low (below 5%) and the vast majority of existing borrowers should be able to weather the impact of higher borrowing costs, given the high proportion on fixed rates, and where affordability testing should ensure that those needing to refinance can afford the higher payments. 

“While activity is likely to remain subdued in the near term, healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time, especially if mortgage rates moderate once Bank Rate peaks.”

However, while the number of mortgage-related property purchases slowed sharply in the first half of the year, cash transactions proved resilient, rising by 2% over the same period said Nationwide.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Until we see a consistent and more considerable decline in mortgage pricing, buyers relying on mortgages are inevitably going to be more price sensitive in coming months on the back of affordability concerns.

“With another 25 basis points interest rate rise expected from the Bank of England later this month, we are not out of the woods just yet.”

30 August: Price Growth Lowest Since 2012 – Zoopla

• House price inflation slumps to 0.1% in the year to July (down from 0.6% in June)
• Property sales expected to fall 21% year-on-year in 2023
• Average property price in July is £265,100 

Annual house price growth has slowed to its lowest level since 2012, rising a paltry 0.1% in the year to July, according to Zoopla, writes Jo Thornhill.

The property portal said it expects one million homes to be sold by the end of 2023. This will be 21% under last year’s figure, marking the lowest number of property sales since 2012 and the equivalent of every household moving once every 23 years.

Buyer demand was also down 34% in July, compared to the five-year average.

The weakening housing market is a sign of its continuing adjustment to higher mortgage rates and cost-of-living pressures with less buyer demand, fewer sales and stagnating house price growth. 

Zoopla’s analysts say market activity continues to track in line with 2019 (pre pandemic) levels but remains well below levels of activity recorded in 2021 and 2022. 

And, while the availability of homes for sale has rebounded after a period of scarcity, mortgage-backed property sales are around 28% lower in 2023 as higher interest rates impact demand.

In some areas of the country, affordability of homes has improved as wages have risen (on average by 7%) while property prices have cooled, with the average UK home costing £265,100 in July. 

On average, affordability should improve by around 9% this year, according to Zoopla. It forecasts the UK house-price-to-earnings ratio will be 6.3 at the end of 2023, in line with the 20-year average. 

Surprisingly, affordability has improved the most in London where the price-to-earnings ratio will move to single digits for the first time in 11 years as house price growth continues to lag earnings growth.

However, this slight improvement is not expected to make much difference for many borrowers. Affordability remains a major barrier for a significant portion of potential buyers with the level of house prices and the cost of mortgage repayments at their highest in years.

In the south of England, where the household income to buy an average priced home remains high at over £75,000 in many market areas. 

Higher mortgage rates over the last year have increased average mortgage repayments by 23% or £216 per month. This is based on an average priced property, comparing mortgage rates at 3.6% a year ago compared to 5.4% today.

Regional trends

Current price trends appear to fall into a north-south divide with six of the eight regions recording a negative annual house price change being in the South of England (the two exceptions are Belfast and Aberdeen).

Edinburgh, Nottingham and Birmingham recorded the most robust annual house price inflation for July at 2%, 1.2% and 1.2% respectively.

Zoopla says the variation in house price growth across the country is partly explained by the ability of first-time buyers to buy at higher mortgage rates. This group accounts for one in three sales, most of which originate from the private rental market. This means the dynamics of renting and buying (ie, which is cheaper) will impact on buyer demand and property prices.

Richard Donnell, executive director at Zoopla commented: “House price growth has slowed rapidly over the last year as demand weakens in the face of higher mortgage rates. 

“Prices are falling more in southern England where higher mortgage rates have priced more people out of the housing market, weakening demand.  While UK house prices are 0.1% higher over the year,  it is the number of sales that have been hit hardest by higher borrowing costs, especially amongst mortgage reliant buyers. 

“Cash buyers are more immune and on track to account for more than one in three sales in 2023. Mortgage rates have started to fall slowly but rates need to fall below 5% before we see an increased appetite to move home in the second half of 2023.”

Matt Thompson, head of sales at estate agents Chestertons, says: “With the Bank of England confirming the 14th consecutive rise in interest rates in a row at the start of August, buyers have been more cautious and are in some cases pausing their property search in order to adjust their finances. 

“However, there still are buyers who have already locked in a mortgage rate with their lender and are keen to secure a property before the rate expires.”

21 August: Rightmove Sees Prices Fall Due To Cost Of Borrowing

• Asking prices down 1.9% (£7,012) in August
• Number of sales agreed 15% lower year on year
• Average asking price £364,895, down £7,012 on July

The average asking price of properties coming on to the market dropped by 1.9% in August, according to property portal Rightmove, writes Jo Thornhill.

It is the largest monthly fall in prices since August 2018 and outpaces the usual summer slowdown, which has seen an average drop of 0.9% in August in recent years. 

The average asking price of homes new to the market is now £364,895, a fall of £7,012 since last month, and the third consecutive monthly drop in average prices. 

Agents blame high inflation and the highest Bank of England Bank Rate since 2008, at 5.25%, for the slow down. Higher interest rates have pushed up the cost of borrowing which is deterring buyers from the housing market. 

Although average asking prices have been falling since May, many sellers are cushioned due to significant house price inflation in recent years. Typical asking prices are still 19% higher than they were in August 2019. This equates to £59,000 on average.

Rightmove data shows the number of agreed sales is 15% lower than in 2019,  when market conditions were more ‘normal’ before the Covid pandemic. But the first-time buyer market is showing resilience, being down by 10%. The number of first-time buyers enquiring about properties for sale is at 1% above 2019 levels.

Agents say this is being fuelled by record high rents, up 33% since 2019, and the lack of available rental property.

The number of available properties to buy is around 10% lower than in 2019, with properties taking on average 55 days to secure a buyer, up from 33 days a year ago.

Rightmove says homes which are priced realistically from the outset take less than half as long to find a buyer compared to those which need a cut to the asking price.

Average asking prices of properties coming to market fell in 10 out of 11 UK regions in August, including Scotland and Wales, according to Rightmove. Only the North East saw marginal price rises at 0.8%. Average asking prices in this region are the cheapest in the country at £186,144.

London and the South West saw the biggest monthly fall in prices for August at -2.3% and -3.2% respectively. London has the highest average asking price at £672,961.

Tim Bannister at Rightmove says: “The lower level of agreed sales compared to this time in 2019 indicates the affordability challenges that many buyers currently face. 

“However, with sales holding up more strongly in the typical first-time buyer sector, the prospect of owning your own home remains an appealing option for those that can afford it, with the alternative being an extremely frenzied rental market, where rents are at record levels.”

16 August: Market On Ice As Buyers Hold Their Fire

• House prices up 1.7% in year to June compared to 1.8% in May
• Eighth consecutive monthly fall in annual price inflation
• Average property price now at £288,000.

House price growth stagnated in June, according to figures from the Office for National Statistics (ONS), writes Jo Thornhill.

Recording the eighth consecutive monthly fall in prices, the ONS clocked the annual rate of increase in June at 1.7%, down from 1.8% in May and 3.5% in April. 

The average UK house price as measured by the ONS now stands at £288,000, which is £5,000 higher than a year ago, but £5,000 below the peak in prices seen in November 2022.

Higher mortgage rates are continuing to put pressure on the housing market, with first-time buyers and movers reassessing their position. 

With the Bank of England Bank Rate now at 5.25%, the average two-year fixed mortgage rate is 6.28%, according to our mortgage broker partner, Better. The average five-year fix is at 5.79%.

Regional house prices

The North East saw the highest annual house price inflation, with average prices increasing by 4.7% in the 12 months to June 2023, up from an annual percentage change of 3.6% in May 2023. But it has the lowest average house price of all English regions, at £161,000. 

London’s average house prices remain the most expensive of any region in the UK, with an average price of £528,000 in June 2023. But the capital was the English region with the lowest annual house price inflation, with average prices decreasing by 0.6% in the 12 months to June 2023, following an annual percentage increase of 0.7% in the 12 months to May 2023. 

This is the first negative annual inflation for London since November 2019, when average house prices decreased by 1.2%. It is also the first negative annual inflation seen in any of the English regions since May 2020, when the North East saw negative annual inflation of 0.7%.

There was no change to house prices in Scotland (0%) in the year to June and the average price is now £189,000. Average prices increased in Wales and Northern Ireland by 0.6% and 2.7% respectively over the year to June. 

Average prices in Wales are now £213,000. Northern Ireland remains the cheapest country in the UK to purchase property with average prices at £174,000.

Matt Thompson, head of sales at estate agent firm Chestertons, said: “Although there still is a vast number of buyers wanting to move as soon as possible, rising interest rates have forced some house-hunters to be more cautious, review their financial situation and calculate a more conservative budget. 

“While this resulted in fewer new buyers entering the market in June, we expect activity to pick up again once buyers have adjusted their criteria and lenders are bringing more mortgage products to the market again.”

Data from Chestertons confirms that the rising cost of mortgage borrowing and stubborn inflation figures reduced the number of new buyers coming to the market in June, with 15% fewer buyers starting their property search compared to May.

Malcolm Webb, technical director at Legal & General Surveying Services, said: “Despite house price growth remaining subdued, there is good cause to remain optimistic about the outlook for the UK property market. 

“It is always important to consider the full context of monthly price movement as property is a long-term investment. The market has a track record of withstanding strong economic headwinds – the fact that… interest rates have remained relatively stable following the recent Bank Rate rise is testament to this.”

7 August: Halifax Logs 2.4% Fall But Cites Market Resilience

• Prices down 2.4% year on year
• 0.3% month-on-month fall – fourth in a row
• Average house price edges down to £285,044

House prices fell 2.4% in the year to July, according to today’s house price monitor from Halifax, the UK’s biggest mortgage lender. The figure was 2.6% in June.

Month on month, the decrease was 0.3%, putting the average house price at £285,044, down from the £285,660 recorded in the previous index.

Kim Kinnaird at Halifax points out that, while prices have fallen for four consecutive months, each drop has been of less than 0.5%: “These figures add to the sense of a housing market which continues to display a degree of resilience in the face of tough economic headwinds.

“In particular, we’re seeing activity among first-time buyers hold up relatively well, with indications some are now searching for smaller homes, to offset higher borrowing costs.” 

Ms Kinnaird says strong wage growth of more than 7% a year is helping sustain the housing market, with an increase in unemployment “unlikely to reach levels that would trigger a sharp deterioration in conditions.”

She also noted that better-than-expected inflation figures in June – the rate fell sharply from 8.7% to 7.9% – could mean that last week’s increase in the Bank of England Bank Rate to 5.25% could be one of the last in the current cycle.

But she conceded that, while mortgage rates have shown signs of stabilising or even falling in recent days, they will likely remain much higher than homeowners have become used to over the last decade: “The continued affordability squeeze will mean constrained market activity persists, and we expect house prices to continue to fall into next year. 

“Based on our current assumptions, we anticipate this being a gradual rather than a precipitous decline.” 

She said the fall in prices is unlikely to completely erode the growth of recent years: “Average prices are still some £45,000 (19%) above pre-Covid levels.”

1 August: Price Falls Fail To Ease Affordability Pain – Nationwide

• Prices down 3.8% year-on-year in July
• Month-on-month decrease of 0.2%
• Average UK property now at £260,828

House prices fell 3.8% in the year to July, according to Nationwide building society’s latest House Price Index (HPI), writes Bethany Garner.

This marks the seventh year-on-year decline the provider has reported in 2023. The average UK property is now worth £260,828 – 0.2% lower than June, and 4.5% below the average price recorded in August 2022.

Robert Gardner, chief economist at Nationwide, said: “This was the weakest outturn since July 2009, although it is only modestly lower than the -3.5% [annual change] recorded last month.”

According to Mr Gardner, higher mortgage rates have dampened buyer demand, which can have a knock-on effect on prices: “Investors’ views about the likely path of UK interest rates have been volatile in recent months, with the projected Bank Rate peak fluctuating between 5% in mid-May and 6.5% in early July. 

“There has been a slight tempering of expectations in recent weeks but longer-term interest rates, which underpin mortgage pricing, remain elevated.”

Despite falling prices, affordability issues continue to plague buyers. According to Nationwide’s analysis, purchasing a typical first-time buyer property with a 20% deposit would swallow 43% of an individual’s take home pay – assuming they earned the UK average wage, and secured a mortgage rate of 6%.

A year ago, the same purchase would account for just 32% of average monthly income. Elsewhere, a 10% deposit on the average UK property represents 55% of gross annual average income.

Mr Gardner added: “This challenging affordability picture helps to explain why housing market activity has been subdued in recent months.

“There were 86,000 completed housing transactions in June, 15% below the levels prevailing the same time last year and around 10% below pre-pandemic levels.”

While the market will likely remain subdued in the short term, Nationwide expects a combination of income growth and modestly lower house prices to improve affordability over time.  

The Bank of England will announce the new Bank Rate on Thursday. It currently stands at 5%, but the expectation is that it will rise to 5.25%.

However, some commentators believe lenders have already adjusted their mortgage rates in anticipation of an increase of this size, so the hope is that the impact on buyers and mortgage-holders will not be severe.

28 July: Zoopla Sees Market Slow In Wake Of Interest Rate Hikes

• House price inflation slows to 0.6% in year to June 
• Buyer demand down 18% in last two months
• Average property price £261,500 (from £261,000)

Annual house price growth continued to slow in the 12 months to June, rising just 0.6%, according to data from online property portal, Zoopla, writes Bethany Garner.

As of June 2023, the average UK home cost £261,500 – just £500 more than the average price Zoopla reported for May.

According to Zoopla’s analysis, rising mortgage rates have suppressed buyer demand, which has fallen 18% in the last two months. Sales volumes for 2023 are expected to be 23% lower than in 2022, suggesting many would-be buyers are delaying their move.

Buying patterns are also shifting towards smaller properties, with the sale of three and four bedroom homes down 41% in the last two months, compared with the same period in 2018. 

A handful of locations – with many clustered in the South of Englnd where average prices tend to be higher – experienced price declines in the year to June. 

In Cambridge, average house prices fell 0.9%, while they declined 0.4% in Bournemouth and 0.2% in Portsmouth. In London, prices fell 0.6%. The average home in the capital now costs £524,900.

Aberdeen saw the largest drop in the 12 months to June, however, with average asking prices shrinking 1.6%.

Areas with the highest house prices have been most exposed to price drops. Zoopla says 80% of markets with average property prices above £300,000 saw prices decrease year on year in June.

Prices improved most in more affordable areas, with Halifax seeing the most substantial growth. House prices in the area increased 4.3% in the year to June, closely followed by Wolverhampton, where prices rose 3.7% in the same period. 

Richard Donnell, executive director at Zoopla, said: “Higher mortgage rates and weaker demand mean we expect a return of modest price falls in H2.

“The impact of higher mortgage rates is far from uniform across the country. It all depends on housing affordability in local housing markets. Activity levels and prices in Southern England have been hit hardest by higher borrowing costs while the more affordable parts of the UK continue to see prices rising slowly.”

19 July: ONS Records Slump In Rate Of House Price Growth

• Seventh consecutive monthly fall in annual price inflation
• Average house prices up 1.9% in year to May (down from 3.5% in April)
• Average property price now at £286,000

House price growth slumped in May, according to figures from the Office for National Statistics – the seventh consecutive monthly fall, writes Jo Thornhill.

The annual rate in May was 1.9%, down from 3.5% in April. 

The average UK house price stands at £286,000, which is £6,000 higher than a year ago, but £7,000 below the peak in prices seen in September 2022.

Higher mortgage rates are continuing to have a dampening effect on the housing market and property prices as has been shown in the house price data from a range of other organisations in recent months (see stories below). 

Regional house price movements

Prices rose year on year in all UK nations, with Northern Ireland showing strongest growth at 5% (average house price now at £172,000). 

There was a 1.7% annual increase in England (average house price now at £304,000), with Wales recording by 1.8% (average house price now at £213,000) and Scotland 3.2% (average house price now at £193,000).

The North East saw the highest annual percentage change of all English regions at 4.0% higher. Average house prices here are the lowest of the English regions at £159,000. While the East saw the lowest growth for England at 0% – average house prices are now at £346,000. 

Tomer Aboody at MT Finance, said: “Although property prices still managed to rise slightly over the past year, these figures illustrate the reduction in buyer confidence. 

“As the market gets to grips with constant negativity in terms of rising interest rates and high inflation, we will see a slowdown in property transactions.

“Something needs to change in order to inject some fuel into the market, as sales volumes are nearly half what they were this time last year. The property market is the backbone of the UK economy and can’t be allowed to grind to a complete halt.”

Anna Clare Harper at investment company GreenResi, said: “This significant slowdown in growth is a direct result of increased interest rates, which have stretched housing affordability. 

“Higher interest rates impact those who already own a property: many are facing double or triple their previous housing costs. It also impacts new purchasers as those reliant on bank finance are no longer willing or able to pay the price level we adjusted to in 2022. 

“Sales volumes have fallen by about a third in the past year. Investors we are dealing with are purchasing at 20 to 30% below peak 2022 market values, and only those who need to sell in this market are selling. Only cash purchasers are not directly affected in terms of their ability to pay.

“This is a price correction following the mini bubble caused by Covid and the stamp duty holiday reductions, which created double-digit house price growth for much of the last three years. As a result, it is a time for homeowners and investors to review their affordability and mortgage terms and plan for the future, but not a time to panic.”

17 July: Annual Price Growth Lowest Since 2019 – Rightmove

• Annual price growth at 0.5%
• Asking prices down 0.2% in July
• Number of properties for sale 12% lower than 2019

The asking price of properties coming to market has fallen by an average of 0.2% according to July figures from Rightmove, writes Jo Thornhill.

The average asking price of homes for sale is now £371,907 – a fall of £905 since last month, and the second consecutive monthly drop in prices. Average annual asking price growth has fallen to its lowest level since November 2019 at just 0.5%.

The falls compare to the 0% flat growth typically seen at this time of year, according to Rightmove. The property portal says new sellers are tempering their price expectations in response to recent interest rate rises and associated buyer affordability constraints.

The number of sales agreed is now 12% below pre-pandemic levels (2019) thanks to a slowdown in June and July.

However, agents are reporting that competitively-priced homes priced are still attracting buyers due to a shortage of property for sale.

Rightmove research shows that sellers who are over-ambitious with their pricing, only to have to reduce their asking price later, have a 10% less chance of selling than those who price more realistically from the outset. 

Larger properties appear to have been the most affected by lower levels of agreed sales. The numbers of sales agreed in June in the mid-market ‘second-stepper’ sector and the top-of-the-ladder sector are 14% behind 2019’s level. 

Two-bedroom properties or smaller have been less affected, with sales for June around 9% below 2019’s level. The typical first-time buyer sector has held up strongly, according to agents, highlighting the continued ‘push’ factor of rising rental costs.  

Regional house prices

Asking prices fell last month in seven of the 11 UK regions where Rightmove monitors homes for sale. Month-on-month falls were seen in Scotland, East of England, the North West, West Midlands and the South East, with the biggest monthly falls posted in Wales (-1.3%) and the North East (-2%).

Only the South West, London, the East Midlands and Yorkshire and Humberside saw asking price increases last month. The East Midlands was the most positive with a monthly gain of 1.1%. 

Homes across the UK are taking around 55 to 60 days to sell. This compares to an average of 32 days this time last year and 62 days in 2019.

Higher mortgage costs

The average interest rate on Rightmove’s mortgage monitor for a five-year fixed rate deal at 85% loan-to-value is 5.69% – up by 0.49 percentage points compared to this time last month. 

Estate agents report that many buyers have become more nervous about their home purchase and are likely to wait until there is greater certainty on mortgage rates.

Tim Bannister, Rightmove’s director of property science, said: “The interest-rate brakes being applied more strongly to slow the economy are now beginning to bite in the housing market. 

“Agents report that some movers are pausing until there is more certainty that mortgage rates have stabilised, as well as reviewing how higher costs affect their plans. 

“However, there remains a large volume of motivated buyers who can factor rate rises into their budgets and are continuing to enquire about homes for sale, which is keeping the market functioning, albeit now with lower sales levels than at this time in 2019.”

7 July: Falling Values Attest To Deepening Mortgage Crisis

• Prices down 0.1% in June – third monthly fall
• Values down 2.6% year-on-year
• Average property price £285,932

House prices fell in June for the third month in a row while year-on-year prices are down by 2.6%, according to Halifax’s monthly house price index, writes Jo Thornhill.

The average house price edged down in June by around £300 compared to May – a 0.1% fall – as higher mortgage costs started to bite. A typical property in the UK now costs £285,932, according to Halifax’s reckoning. 

The annual house price drop is the largest year-on-year since June 2011. Experts say high inflation and rising interest rates are likely to cause further price falls in the coming months.

Kim Kinnaird, director, Halifax Mortgages, said: “How deep or persistent the downturn in house prices will be remains hard to predict. 

“Consumer price inflation is likely to come down in the near term as energy and food prices look set to reverse their steep rises, but core inflation is clearly proving stickier than originally expected. 

“With markets now forecasting a peak in Bank Rate of over 6%, the likelihood is that mortgage rates will remain higher for longer, and the squeeze on household finances will continue to put downward pressure on house prices over the coming year.”

Halifax’s data suggest some resilience in the new build property market with annual price growth up by 1.9%. That said, growth has continued to slow, and has dropped to its lowest level in more than three years.

For older properties prices fell on an annual basis in June across all property types led by flats (down 3.1%) and terraced homes (down 2.5%). The fall in annual prices for semi-detached and detached homes were 1.9% and 1.3% respectively.

Regional prices

Property prices have fallen over the past year in all regions, the only exception being the West Midlands, which has seen a 1.5% increase (average house price is £251,139). 

There have also been marginal gains in Yorkshire & Humberside ( up 0.2% – average house price £203,674) and Northern Ireland ( up 0.2% – average house price £186,856).

House prices are under the most price pressure in the South East of England, where prices have seen the biggest fall, by 3%. The average price is now £384,106. 

London recorded an annual decline of 2.6% (the average property price is £533,057). This is London’s weakest house price performance since October 2009 and a drop of around £15,000 over the last year.

In Scotland, prices were down slightly on the year, by 0.1%, and the average house price is now £201,774. This is the first annual contraction in property prices in Scotland in the last three years.

Jason Tebb, chief executive at property search website OnTheMarket.com, said the market has shown resilience in uncertain times: “The high cost of living and potential for further rate rises are having an impact on how much buyers are willing and able to pay for their next home.

“However, given all the economic uncertainty it is remarkable how relatively stable the market appears to be following a period of unprecedented house price growth fuelled by shortage of new properties coming to the market.

“There are committed buyers who wish to move but they are also increasingly price sensitive. Motivated sellers must price sensibly to generate interest and ensure their expectations with regard to time-frames are met.” 

But Alice Haine, personal finance analyst at Bestinvest, said issues in the economy were presenting challenges, particularly for first time buyers: “House price falls have been relatively muted so far, with the property market proving resilient. 

“But with the Bank of England now under fire for failing to act fast enough to tackle the inflation threat, the ensuing mortgage crisis is likely to change that scenario in the coming months as house price growth faces a significant drag from higher interest rates. 

“These are worrying times for first-time buyers whose carefully saved deposit may no longer be enough to secure the home they want. Some borrowers may consider radical solutions such as longer mortgage terms, 100% mortgages and downgrading the size and location of the property they purchase to ensure they can afford repayments. 

“For others, rapidly rising borrowing costs may feel too alarming, encouraging them to shelve buying plans altogether or hold out until property prices fall further.”

30 June: ‘Stable’ Market Faces Severe Challenges As Rates Rise

• Prices down 3.5% year-on-year in June
• Month-on-month increase at 0.1%
• Average property value at £262,239

House prices fell 3.5% year-on-year in June, according to the latest House Price Index from Nationwide building society. This follows a drop of 3.4% in May.

Month-on-month, prices in June edged up 0.1%, reversing the 0.1% decline seen in May. Nationwide describes the market as ‘broadly stable’.

According to Robert Gardner, the society’s chief economist, rising mortgage rates have yet to have a significant impact on activity across the market: “Longer term interest rates, which underpin mortgage pricing, have increased sharply in recent months, in response to data indicating that underlying inflation in the UK economy is not moderating as fast as expected. 

“This has prompted investors to expect the Bank of England to increase its policy rate further and for it to remain higher for longer.

“Longer term borrowing costs have risen to levels similar to those prevailing in the wake of the mini-Budget last year, but this has yet to have the same negative impact on sentiment. The number of mortgage applications has not yet declined and indicators of consumer confidence have continued to improve, though they remain below long-run averages.”

Higher rates are expected to dampen demand as would-be buyers are obliged to stretch their finances further so that they can afford their purchase.

Mr Gardner said: “The sharp increase in borrowing costs is likely to exert a significant drag on housing market activity in the near term. For a representative first-time buyer earning the average wage and buying the typical property with a 20% deposit, mortgage payments as a share of take-home pay are now well above the long-run average.

He added that house prices remain high relative to earnings, which means first-time buyers are struggling to raise a deposit: “A 10% deposit on a typical first-time buyer home is equal to around 55% of gross annual income. This is down from the all-time highs of 59% prevailing in late 2022, but still marginally above the levels prevailing before the financial crisis struck in 2007/8.

“The sharp rise in rents, together with continued high rates of inflation more generally, is continuing to make it difficult for many prospective buyers to save for a deposit.”

With regard to existing borrowers coming to the end of a fixed-rate deal, Mr Gardner said they will face hefty increases in monthly payments: “Some 85% of outstanding mortgages on fixed interest rates, and around 400,000 borrowers are due to refinance each quarter in the years ahead as their deals come to an end. 

“For those coming off two-year fixed rate deals, with mortgage rates approaching 6%, a new two-year deal is around 4.25 percentage points higher than their existing rate, which equates to an increase of £385 per month for a typical borrower. 

“Those coming off five-year deals face an increase of 3.50 percentage points on a new five-year fix, assuming a rate of 5.5%, which equates to an increase of around £315 per month for a typical mortgage borrower.”

Mr Gardner says borrowers’ ability to afford higher rates will have been ‘stress-tested’ when they took out their current deals to ensure they could cope with such an increase: “Also, incomes have been rising at a solid pace in recent years. Lenders will also work with borrowers to provide assistance wherever possible.

“Therefore, providing the labour market and interest rates perform broadly as expected, we are unlikely to see the waves of forced selling which would probably be required to result in a more disorderly adjustment to the housing market.”

The government and market regulators have told lenders to exercise forbearance with borrowers who face financial difficulties as a result of rising mortgage costs, with measures including payment holidays and temporary moves to interest-only terms.

28 June: Sellers Offer Deep Price Discounts To Tempt Buyers

• House price inflation slows to 1.2% in year to May
• Average property price £261,100 (from £260,700)
• 42% of sellers discount price by 5% or more 
• 14% fewer buyers in market compared to 2022

Annual house price growth has continued to slow and was recorded at just 1.2% for the year to May, according to the latest data from online property portal Zoopla, writes Jo Thornhill.

Higher mortgage rates and the increased cost of living are putting downward pressure on house prices, with buyers driving a harder bargain compared to recent years. 

Four in 10 buyers (42%) report having given a 5% or higher discount on their asking price to secure a sale, up from 28% in February. Zoopla says 15% of sellers are discounting their price by 10% or more.

The average discount-to-asking price is now 3.8%. This is a fall from the level recorded in February, when the average discount-to-asking price reached 4.5% – a five year high.

The platform says the outlook for the market remains subdued, with modest quarterly falls in house prices expected for the rest of this year. Average house prices are on track to be around 5% lower by the end of 2023. 

This is largely due to higher mortgage rates which, Zoopla says are squeezing greater numbers of buyers out of the market and hitting the buying power of borrowers by up to 20%. 

Zoopla’s data shows 14% fewer buyers in the market over the last four weeks compared to a year ago. However, those that remain in the market appear committed to moving home, with sales agreed running at 8% above the five-year average.

On a regional basis, market activity has held up better in Scotland (2.1% annually), Wales (2.5%), the West Midlands (2.4% and Yorkshire and Humber (2.2%). London and Northern Ireland have seen weaker conditions with annual price falls of -0.2% and -0.8% respectively. 

House price growth generally will be affected if more properties start to be listed for sale. Experts are predicting an uptick in supply of property due to distressed mortgage holders looking to sell as interest rates make mortgages increasingly expensive.

Zoopla says there are some signs that supply is starting to grow at an above-average rate, with 18% more homes listed for sale in the last four weeks compared to the five-year average.

But this at least shouldn’t be compounded by forced sales, which will be limited thank to support measures by the Government for existing mortgage holders, announced on Friday last week (23 June)

Richard Donnell, executive director at Zoopla says: “The resilience of the housing market and homebuyers is set to be tested once again as mortgage rates increase over 5%. Mortgage rates falling to 4% earlier this year supported a rebound in sales and led to house prices registering small month-on-month gains.

“Modest price falls will resume in the second half of 2023 as the supply of homes increases, giving buyers more choice and room for negotiation on price. We still expect house prices to be 5% lower over 2023 and there is a very substantial equity buffer to absorb price falls which are likely to be concentrated across southern England.

“Demand for homes remains but those households looking to move home in 2023 need to be very realistic on pricing and get the view of agents on where to pitch their asking price to secure a sale.”

21 June: House Price Inflation Eases As Borrowing Costs Soar

• Average house prices up 3.5% in year to April
• Prices declining from peak in September 2022
• Average price stands at £286,000
• Bank of England mulling Bank Rate hike to 5%

The pace of property price increases is continuing to slow. Figures from the Office for National Statistics show the annual rate falling again in April to 3.5%, compared to 4.1% in March – the sixth consecutive monthly fall, writes Jo Thornhill.

The average UK house price stands at £286,000, which is up £9,000 in a year, but down £7,000 since September 2022, when prices peaked.

The North East saw the strongest house price growth at 5.5% over the year to April, closely followed by Northern Ireland at 5% and the North West at 4.8%. London has recorded the lowest annual house price increase at 2.4%.

It is expected that rising mortgage rates will continue to have a dampening effect on the housing market and property prices in the coming months.

Following today’s inflation news – the headline rate stalled month on month at 8.7% – it seems likely the Bank of England will raise the Bank Rate again tomorrow from 4.5% to 4.75% or even 5%.

Karen Noye, mortgage expert at Quilter, says the figures are exactly the sort of gloomy picture mortgage borrowers didn’t want to see: “Considering the mortgage storm that is battering the country, this is likely the last time we will see an increase in house prices for some time.”

Alex Lyle, director of Richmond-based estate agent Antony Roberts, says: “It’s a tale of two markets with prime stock new to the market selling and continuing to sell well, while strength of demand in the mainstream market, which is more reliant on relatively high loan-to-value mortgages, has dropped off, as has demand for flats.

“There is no doubt some buyers are anxious and beginning to question the timing of their search, with potential vendors also wondering if it’s best to hold off and see what the market looks like in the autumn. 

“Properties coming to market now with ambitious prices are struggling to attract interest and are at risk of getting stuck.”

19 June: Rightmove Sees Year’s First Fall As Mortgages Soar

• New seller asking prices dip for first time this year
• Property hits market with average value at £372,812
• Further price falls expected for ‘most months’ of 2023

The price of property coming to market edged down this month, according to June data from Rightmove, writes Laura Howard. 

The £82 fall in the average price of a home is the first the property portal has recorded this year – and the first seen in June since 2017 – suggesting an early start to the summer slowdown.

Rightmove’s report comes against a backdrop of significant increases in mortgage rates, which is straining affordability and creating uncertainty around moving. 

In recent weeks, a raft of lenders including HSBC, Nationwide, Santander, and Skipton building society have pulled fixed rate deals and brought them back to market at higher rates.

The average rate for a five-year fix with a 15% deposit is now 5.20%, according to Rightmove, compared to 4.56% just four weeks ago. It means a new buyer purchasing a property at the current average asking price (£372,912) would pay an extra £117 a month on a mortgage with a 25-year term.

The official Bank Rate is expected to rise from 4.5% to 4.75% when the Bank of England’s Monetary Policy Committee meets on Thursday, in a bid to tackle high inflation. 

However, Rightmove says those who can afford higher mortgage costs are determined to move. It found that the number of buyer enquiries to estate agents in the last two weeks is 6% higher than the same two weeks in pre-Covid 2019. 

The number of sales agreed in the last two weeks, however, is 6% lower than the same period in 2019.

Tim Bannister, director of property science at Rightmove, commented: “The significant changes in the mortgage market over the last four weeks are creating renewed disruption and uncertainty among movers trying to calculate how much they can afford to borrow and repay.This is leading more prospective buyers to check their current affordability.

“It is likely to feel very frenetic for those taking out a mortgage right now, as they try to quickly lock in the best rate that they can find. 

“Although the impact of higher mortgage rates on activity levels has been limited so far, with prospective buyers who can still afford to move appearing determined to go ahead, it remains to be seen how movers will respond to the expected further rate rises.”

Rightmove predicts a 2% annual drop in asking prices by the end of 2023.

7 June: Halifax Sees Year-On-Year Fall For First Time Since 2012

• Prices down 1% in 12 months
• No change month-on-month in May
• Average property price at £286,532

London was hosting the Olympic Games in 2012 the last time house prices fell year-on-year, according to the UK’s biggest mortgage lender. Halifax recorded a 1% decline in the 12 months to May, according to its latest House Price Index, out today.

The former building society, now part of Lloyds Banking Group, saw prices flatline in May itself. Its average property value stood at £286,532, just £130 lower than April but around £3,000 lower than this time last year.

You can find an explanation in Bethany’s article of how the market’s various house price indices are calculated, and why their average property values differ.

Kim Kinnaird, director at Halifax Mortgages, said house prices were strong this time last year, and on an upwards trajectory at that point: “Property prices have fallen by about £3,000 over the last 12 months and are down around £7,500 from the peak in August 2022. 

“But today’s prices are still £5,000 up since the end of last year, and £25,000 above the level of two years ago.”

Ms Kinnaird says the brief upturn in the housing market in the first quarter of 2023 has faded, with the impact of higher interest rates feeding through to household budgets, in particular for those with fixed rate mortgage deals coming to an end.

See our mortgages news stack for reports on how mortgage rates are edging upwards in anticipation of a Bank of England rate rise on 22 June.

Ms Kinnaird said: “With consumer price inflation remaining stubbornly high, markets are pricing in several more rate rises that would take the Bank Rate above 5% for the first time since the start of 2008. 

“Those expectations have led fixed mortgage rates to start rising again across the market. This will inevitably impact confidence in the housing market as both buyers and sellers adjust their expectations, and latest industry figures for both mortgage approvals and completed transactions show demand is cooling. 

“Therefore further downward pressure on house prices is still expected.”

She added that low levels of unemployment could bolster current prices, especially if wage growth is brisk in the coming months.

Alice Haine, personal finance analyst at Bestinvest, said: “A slight annual decline may seem like good news for first-time buyers looking to escape punishing rental costs, but with expectations that interest rates may hit 5.25% or higher by the end of the year, the knock-on effect on mortgage rates makes actually affording a home significantly harder.

“The sad reality is that the big movements in the bond markets, which in turn caused increases in swap rates – something lenders use to price home loans – means mortgage providers are withdrawing products at an alarming rate and talk of a property price crash is back.”

1 June: Nationwide Reports Price Falls Ahead Of Rate Increases

• Prices fall 0.1% month-on-month in May
• Annual decline at 3.4% as market cools
• Average price stable at £260,736

House prices fell by 0.1% in May compared to April, when they grew by 0.4% on March’s figure, according to today’s figures from Nationwide building society. 

Year-on-year, prices in May were 3.4% down on the same month in 2022. April showed a 2.7% annual decline.

Nationwide says the average price of a UK property now stands at £260,736.

Robert Gardner, Nationwide’s chief economist, said: “Following tentative signs of improvement in April, annual house price growth softened again in May. However, this largely reflects base effects [in the wider economy], with prices broadly flat over the month after taking account of seasonal effects.

“Average prices remain 4% below their August peak.”

According to Bank of England data, the number of mortgages approved for house purchase in March – at 52,000 – was roughly 20% below pre-pandemic levels, when the monthly average was close to 65,000.

Mr Gardner said the housing market will continue to face headwinds in the near term: “While consumer price inflation did slow in April, it was a much smaller decline than most analysts had expected. 

“As a result, investors’ expectations for the future path of Bank Rate increased noticeably in late May, suggesting it could peak at 5.5%, well above the 4.5% peak that was priced in around late March. And rates are also projected to remain higher for longer.”

The Bank Rate largely determines mortgage rates, and a number of lenders have withdrawn or repriced their deals ahead of the next Bank of England announcement on 22 June,

Despite this, Mr Gardner remains optimistic about the prospects for the market: “In our view a relatively soft landing remains the most likely outcome since labour market conditions remain solid and household balance sheets appear in relatively good shape.

“While activity is likely to remain subdued in the near term, healthy rates of nominal income growth, together with modestly lower house prices, should help to improve housing affordability over time, especially if mortgage rates moderate once Bank Rate peaks.”

30 May: Outlook Uncertain As Prices Edge Down – Zoopla

• Prices fall 1.3% in past six months
• Annual house price inflation at 1.9%
• Landlords selling up boosts supply 
• Average house price at £260,700

Property prices rose by 1.9% in the year to April, according to online property portal Zoopla, but rising mortgage rates could dampen future price rises this year according to experts, writes Jo Thornhill.

Despite the annual gain, Zoopla’s price index shows a 1.3% fall in house prices over the past six months as mortgage rates and living costs have continued to bite. The average UK house price stands at £260,700.

Stubbornly high inflation is also now likely to impact on interest rates, which could have a further dampening effect on confidence and the housing market.

That said, some green shoots have emerged, with buyer demand relatively buoyant. Agreed sales over the past four weeks have reached their highest point so far this year – up 11% on the five-year average for the same period. 

Larger numbers of landlords are selling investment-oriented buy-to-let properties, fuelled by higher mortgage costs, taxation, and new regulations that give greater powers to tenants. These properties are adding significantly to the supply of homes coming to the market, accounting for around one in 10 sales (11%), according to Zoopla.

Ex-rented homes have an asking price typically around 25% lower than owner-occupier properties, so they can appeal to budget conscious first-time buyers.

There is also evidence that sellers are being more realistic about their pricing. Almost one in five properties (18%) listed on Zoopla have had the asking price cut by 5% or more, lower than the figure in February, when the number reached 28%.

While average annual prices rose by 1.9% in April, there is a mixed picture across the UK.

Many cities in the Midlands and the north of England saw a much bigger annual jump in prices, including Nottingham (3.9%), Birmingham (3.8%), Manchester (3.6% ), and Leeds (3.4%). In contrast, average prices in London fell year on year by 0.2%.

Cardiff saw above average annual growth of 3.4%, but prices fell on average by 0.5% in Northern Ireland.

And in Scotland, Edinburgh saw above average annual price gains of 2.7% but other cities did not fare as strongly including Glasgow, up 0.7%, and Aberdeen, where prices fell by 2.4%.

Zoopla says it expects to see prices remain fairly flat for the rest of the year. But this hinges on average mortgage rates not climbing much beyond 5% as this would cause downward pressure on prices.

Richard Donnell, executive director at Zoopla, said: “Sellers shouldn’t get carried away by more positive data on the housing market and need to price their homes realistically if they are serious about moving. Buyers remain price-sensitive, with one eye firmly on the outlook for the economy, the cost of living and the trajectory of mortgage rates, which appear likely to edge higher in the coming weeks.”

Estate agents report buyer demand has been higher so far this year than was initially predicted.

Matt Thompson, head of sales at London-based estate agent Chestertons, said: “Despite economic uncertainty, the year started with an incredibly high number of house hunters wanting to find a property. This demand has only grown stronger over the past few weeks, especially with the introduction of more attractive mortgage products including the 100% mortgage (from Skipton building society).”

And Guy Gittins, chief executive at estate agent Foxtons, said: “The market dynamic for sales rebounded much stronger than many had forecast at the start of the year. New buyer activity has led to consistently higher viewing numbers than we have seen at any point in the last six years. 

“In fact, our buyer numbers year to date are tracking very closely with the buyer numbers this time last year, which most people would refer to as the most buoyant market we’ve seen since 2016.”

24 May: House Prices Fall For Fifth Consecutive Month – ONS

Average property prices fell for the fifth consecutive month in March, according to figures published by the Office for National Statistics (ONS) today, writes Bethany Garner.

The average price of a UK home reached £285,000 in March 2023, which is £3,000 lower than February 2023.

Despite this monthly decline, however, prices grew year-on-year, rising 4.1% (£11,000) since March 2022.

You can read more about how the market’s various house price indices are calculated in my analysis.

Prices climbed throughout the UK, but Northern Ireland experienced the largest annual increase of the home nations, with average property values rising 5% to £172,000 since last March.

Average prices rose 4.8% in Wales (to £185,000), 4.1% in England (to £304,000), and 3% in Scotland (to £185,000).

In England, the South West witnessed a larger annual increase than any other region, with average prices rising 5.4%. Price inflation in London continued to lag behind, at 1.5%. 

Aimee North, head of housing market indices at the ONS, said: “The slowdown in annual UK house price inflation continued into March.

“However, the rapid growth within UK rental prices shows no sign of abating with another annual inflation rise in April. London and Yorkshire and The Humber showed the highest annual rates in England this month, with London experiencing the highest annual percentage increase in over a decade.”

Malcolm Webb, technical director at Legal and General Surveying Services, commented: “Momentum is picking up once again as market activity remains in-line with pre-pandemic levels. 

“Strong product innovations, such as the release of Skipton Building Society’s new 100% LTV mortgage product, are providing more options to potential buyers, particularly those stuck in the rental cycle.”

22 May: Rightmove Sees Record Prices After Jump In May

• Average UK house asking price jumped by 1.8% in May
• Year-on-year increase at 1.5%
• Prices hit record high as market shows signs of stability

The average price of property coming onto the market rose by 1.8% (£6,647) in May to reach a new record of £372,894, according to online property portal Rightmove, writes Jo Thornhill.

It is the biggest monthly rise recorded by Rightmove this year as mortgage rates have stabilised and confidence appears to be returning to the market.

The 1.8% rise recorded for this month is higher than the historic average rises seen by Rightmove each May, which tend to be around 1%.

Rightmove’s price index shows average prices at over £100,000 more than other indices (see below). In part this is because it uses asking prices rather than sale prices in its calculations. You can read more about how the various indices are calculated in Bethany’s analysis.

According to Rightmove, the value of the average first-time buyer property coming on to the market increased by 0.6% to £226,399. Buyer confidence and demand is reported to be strongest in the first-time buyer and second-stepper sector, compared to top-of-the-ladder properties. 

Buyer demand is down 1% at the top of the property ladder, compared to pre-pandemic levels (2019), according to the property portal. In contrast, demand is up 6% for first-time buyer homes (compared to 2019) and up 3% in the second-stepper sector.

The discount from final asking prices to agreed sale price has steadied at an average of 3.1%, in line with pre-pandemic market levels.

Tim Bannister, Rightmove’s director of property science, said: “This month’s strong jump in new seller asking prices looks like a belated reaction and a sign of increasing confidence from sellers, as we’d usually see such a big monthly increase earlier in the spring season. 

“One reason for this increased confidence may be that the gloomy start-of-the-year predictions for the market are looking increasingly unlikely. What is much more likely is that the market will continue to transition to a more normal activity level this year following the exceptional activity of the pandemic years.”

Mr Bannister added that steadying mortgage rates and a more positive outlook for the economy were also contributing to an improvement in seller confidence.

Average five-year fixed rate mortgage deals (for buyers with a 15% deposit or equity) are 4.56%, according to Rightmove, compared to 5.89% in October last year.

Lars Gooch, operations director at London-based estate agents Keatons, said: “We’re seeing a reasonable level of activity this spring, as the market follows its usual pattern of being busy at this time of year. The market is still stock-starved and good quality homes in popular areas are finding buyers quickly.”

Jeremy Leaf, estate agent and former residential chairman at the Royal Institution of Chartered Surveyors, said: “Now that inflation and interest rates seem to be at or approaching their peak, buyers are slowly returning with added confidence making it feel like a more normal spring market. 

“However, without the intense competition for property we saw 12 months ago, those not relying on mortgages or who are equity rich are very much to the fore but don’t want to be rushed before taking the plunge.

“The reasons for moving haven’t disappeared, even though the race for space may be run. Looking forward, we don’t see any particularly significant changes other than supply and demand continuing to balance out.”

9 May: Halifax Sees Prices Edge Down As Market ‘Stabilises’

• Month-on-month fall of 0.3% in April
• Annual prices up 0.1%
• Typical property costs £286,896 

Average house prices fell by 0.3% in April, according to Halifax, after three consecutive months of growth up to March. But Britain’s biggest mortgage lender says an increase in approvals points to growing market stability, writes Jo Thornhill.

The rate of annual house price inflation has slowed to 0.1% from 1.6% in March.

It means average property prices are similar to where they were at this point last year.  Average homes cost £286,896 in April, roughly £1,000 lower than a month before. 

This figure is around £7,000 lower than average prices at their peak last summer, although they are £28,000 higher than two years ago.

While existing property prices have fallen by 0.6% over the last year, new build homes have risen by 3.5% in the same time. The first-time buyer market is also showing resilience with average first time buyer properties up 0.7% in the past year, compared to a fall of -0.1% for average home mover prices. 

Rents have continued to rise sharply which has pushed more first-timers on to the property ladder. Today has seen the launch of a 100% loan aimed at renters by Skipton building society.

Regionally there is a growing split in house price performance with prices in the south of England, where prices tend to be the highest, seeing the biggest pressure. The South East registered the biggest fall at -0.6% over the past year (the average house price in the region is now £387,469).

In all other regions and nations across the UK the rate of annual property price inflation has stayed in positive territory during April. The West Midlands posted the strongest annual growth of 3.1% (the average property price is £249,554).

Northern Ireland saw average annual growth of 2.7% (average house price is £186,846), Scotland saw 2.2%, (average house price is £201,489) and Wales saw growth of 1.0%, (average house price is  £216,559).

Kim Kinnaird, director at Halifax Mortgages, said: “House price movements over recent months have largely mirrored the short-term volatility seen in borrowing costs. The sharp fall in prices we saw at the end of last year after September’s ‘mini-budget’ preceded something of a rebound in the first quarter of this year as economic conditions improved.

“The economy has proven to be resilient, with a robust labour market and consumer price inflation predicted to decelerate sharply in the coming months. Mortgage rates are now stabilising, and though they remain well above the average of recent years, this gives important certainty to would-be buyers. While the housing market as a whole remains subdued, the number of properties for sale is also slowly increasing, as sellers adapt to market conditions.

“Alongside a market-wide uptick in mortgage approvals, these latest figures may indicate a more steady environment. However, cost of living concerns remain real for many households, which will likely continue to weigh on sentiment and activity. Combined with the impact of higher interest rates gradually feeding through to those re-mortgaging their current fixed-rate deals, we should expect some further downward pressure on house prices over the course of this year.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “The recent rise in swap rates, which underpin the pricing of fixed-rate mortgages, has resulted in lenders removing their market-leading lower loan-to-value products, with the main players increasing pricing. 

“However, swaps have since plateaued and have been edging downwards again so if this trend continues, we expect to see a return of five-year fixes at sub-4%, which will be a boost to buyers. First-time buyer numbers continue to prove resilient and, with lenders returning to higher loan-to-value products, this will assist those struggling to get on the housing ladder.”

3 May: Zoopla Says Slowing Growth Indicates Healthy Market

• Annual house price growth slows to 3% 
• Available property stock 66% up on last year
• First-time buyers remain biggest buyer group
• Average UK property price at £259,700

Annual house price growth is continuing to slow, according to Zoopla’s May house price report – but the property portal says this is a sign of sustained market recovery, writes Laura Howard.

House price inflation slowed to 3% in the 12 months to March, down from 4.1% the previous month, while the last quarter has seen average falls of 0.7%. 

All UK regions and cities saw annual price increases with the exception of Aberdeen, which posted falls of 2.2%. Nottingham performed best with an annual increase of 5.5%. Average house prices in these areas now stand at £139,100 and £201,200 respectively.

The latest figures indicate a soft landing to the housing market according to Zoopla, with a major price correction remaining a ‘very low probability’.  

The number of homes listed for sale has continued to grow, according to property portal, and is now 66% higher than 12 months ago. 

The number of new sales being agreed is also 6% higher compared to pre-covid 2019, and is now in line with the five-year average. The highest number of agreed sales are in Scotland, the North East and London, reflecting more realistic affordability levels in the areas.

While London is home to the most expensive property in the UK, costing an average of £521,700, the capital has recorded weak price inflation over the last six years which has improved affordability.

First-time buyers represented the largest buyer group in 2022, accounting for more than estimated 34% of sales, according to the report. But affordability constraints for those taking the first step on the ladder remain tough.

The household income required to buy a typical three-bed first-time buyer home has increased by an average of £7,530 in the last three years to £55,900. 

For a two-bedroom the household income required is £51,000, up by £4,900. The average asking price of a three-bed home first time buyer home is £230,000, and £210,000 for a two-bed property.

Zoopla forecasts that house price growth will slow further over 2023, registering low negative annual growth by the summer and ending the year at -1%.

Zoopla’s house price index is based on a combination of sold prices, mortgage valuations and data for agreed sales.

2 May: Nationwide Logs Annual Price Fall But Hints At Recovery

House prices dropped by 2.7% in the year to April 2023, but Nationwide building society says the market is beginning to show signs of recovery, writes Bethany Garner.

According to the society’s latest monthly House Price Index, prices rose by 0.5% from March to April following seven consecutive monthly falls. 

The 2.7% year on year fall in prices is also an improvement on the 3.1% plunge the building society reported in the year to March 2023.

Robert Gardner, chief economist at Nationwide, said: “While annual house price growth remained negative in April there were tentative signs of recovery.

“Recent Bank of England data suggests housing market activity remained subdued in the opening months of 2023, with the number of mortgages approved for house purchase in February nearly 40% below the level prevailing a year ago, and around a third lower than pre-pandemic levels. 

“However, in recent months industry data on mortgage applications point to signs of pick-up.”

Rightmove has also recorded improved market performance this spring, with average house prices increasing by 1.2% in the year to April, and creeping up 0.2% compared with March (see story below, 24 April). 

According to Nationwide, average UK house prices stood at £260,441 in April, rising from the £257,122 reported in March. However, since this figure is not seasonally adjusted, the uptick may in part reflect the market’s tendency to heat up in spring.

26 April: Grim Santander Forecast Sees Prices Falling 10% In 2023

Santander, the Spanish-owned UK high street bank, is forecasting house prices to fall by 10% in 2023, taking them back to 2021 levels.

In a gloomy assessment accompanying its first quarter results, the bank said the economic outlook for 2023 remains uncertain: “Inflation is forecast to be above the 2% target rate for 2023, putting further pressure on real disposable income.

“The stubborn inflation scenario is based on higher inflation, which is persistently above the Bank of England target. This results in base rate peaking at 6%, further adding to the cost of living crisis and reducing consumer demand.

“The challenges faced by households and businesses are expected to continue through 2023.”

Santander says it proactively contacted 2.5 million customers in the first quarter, helping them to navigate the challenges arising in the current environment. 

The bank reported a Q1 profit of £547 million, up 11% on the £495 million it made in the corresponding period in 2022.

24 April: Market Evolving From ‘Frenzied Mindset’ – Rightmove

• Average UK property price creeps up 0.2% to £366,247 in April
• Annual rate of increase relatively modest 1.2%
• Value of first-time buyer homes hits record high
• Sellers lowering expectations to reflect economic reality

Property portal Rightmove’s latest house price index suggests that, despite economic headwinds, the UK’s property market has performed well in April, supported by cooling mortgage rates and realistic pricing, writes Laura Howard.

The average price of property listed by UK estate agents on Rightmove in April increased by 0.2% – or £890 – compared to the previous month, as the traditional Spring buying and selling season gets underway. 

The rise is notably less than the 1.2% typically seen at this time of year, according to the property portal, and marks a smaller monthly rise than the 0.8% recorded in March. However, it says sellers are pricing realistically to tempt seasonal buyers.

Rises were recorded in all UK regions this month, with the exception of London and the North East which saw falls of 0.5% and 0.1% respectively. Scotland posted the biggest monthly rise at 3.2%.

The average cost of a UK home currently listed for sale via Rightmove now stands at £366,247, which is 1.7% higher than last year.

While the general rate of growth is slowing, average values of typical first-time-buyer homes (defined as two bedrooms or fewer) hit a new record high of £224,963 in April. 

Rightmove said that rocketing rents was a key motivator – for those able to clear the mortgage and deposit hurdles – to get onto the property ladder.

Mortgage costs have also settled from their peak of more than 6.50% following last autumn’s mini-Budget. Rightmove said the average cost of a ‘first-time buyer’ 5-year fixed rate mortgage with a 15% deposit now stands at 4.46%. 

However, while costs have continued to edge down, the average rate for this kind of deal stood at 2.64% this time last year.

The number of sales being agreed in April suggests a healthier market than many expected, said Rightmove. Levels are just 1% under the pre-Covid figures for March 2019, and above those seen in September before they plummeted by 21% following the mini-Budget.

However, at 18% behind last year, agreed sales are consistent with more normal levels of market activity.

Tim Bannister at Rightmove said: “Agents are reporting that many sellers have transitioned out of the frenzied multi-bid market mindset of recent years and understand the new need to tempt spring buyers with a competitive price. 

“The current unexpectedly stable conditions may tempt more sellers to enter the market who had been considering a move in the last few years but had been put off by its frenetic pace.”

Karl Tatler, who runs Karl Tatler Estate Agents, added: “The great news is that both buyers and sellers appear to have adapted to and accepted the current economic and property market conditions. 

“There are now more attractive fixed rate mortgages available providing buyers with more confidence, and there has been a noticeable increase in sales activity.”

19 April: ONS Logs Fourth Monthly Price Fall In Succession

Property prices fell for the fourth month in a row in February, according to the latest figures published today by the Office for National Statistics, Andrew Michael writes.

The average price of a UK home reached £288,000, £16,000 (5.5%) higher than February last year, but £2,000 lower compared to January 2023.

The figures mask substantial variation across the home nations. In England, house prices rose by 6% to an average of £308,000 in the year to February. This contrasted with a double-digit rise of 10.2% recorded in Northern Ireland, taking prices to an average of £175,000.

In Wales, prices also lifted significantly, by 6.4% to an average of £215,000 in February. But Scotland barely registered any gain with the average home rising in price by 1% to £180,000.

Across England, the West Midlands recorded the highest annual percentage change with prices registering an uplift of 8.6%. London performed the worst with a rise of 2.9%.

Nick Leeming, chairman of Jackson-Stops, said: “Today’s figures show a soft repricing, which marks a more stable period for house price values following the supersonic heights reached this time last year.

“Market conditions and an under-reliance on outside funding has left cash buyers in a fortunate position, able to push ahead with quick completions and benefit from the increasing number of properties entering the market.”

Nicky Stevenson, managing director at national estate agents Fine & Country, said: “All signs point to a strong showing for the property market over the next few months, in what is traditionally a very busy period. Sellers are flocking back, with the ratio of new sales to instructions returning to pre-pandemic levels.”

7 April: Prices Hold In March As Mortgage Crisis Eases – Halifax

• Annual price increase of 1.6% for year to March 
• Fourth consecutive month of annual growth but rate is slowing
• Typical property in March costs £287,880, up £2,000 from February

Figures from Halifax, the UK’s biggest mortgage lender, reveal that UK property prices continued to climb by 1.6% in the 12 months to March. 

It’s the fourth consecutive month of annual growth and contradicts falling values reported by other major indices including Nationwide building society and the Office for National Statistics (ONS).

However, the March figure is the weakest rate of annual growth reported by Halifax since October 2019, and compares to 12.5% at its peak in June 2022.

It’s also considerably lower than the 2.1% annual growth rate the lender reported across the previous three months of February, January and December.

On a monthly basis, prices rose by 0.8% in March, compared to 1.2% in February, said Halifax. It puts the typical value of a UK property last month at £287,880.

Kim Kinnaird, director at Halifax Mortgages, said: “The principal factor behind this improved picture has been an easing of mortgage rates. 

“The sudden spike in borrowing costs we saw in November and December has now been largely reversed, and while rates remain much higher than the average of the last decade, across the industry, a typical five-year fixed rate deal (75% loan to value) is down by more than 100 basis points over the last few months.” 

Figures from the Bank of England published last week show the number of approved mortgages for house purchase increased to 43,500 in February, from 39,600 in January. It marks the first monthly increase since August 2022.

House prices climbed across all UK nations and regions in March. However, with the exception of Greater London and the North East, all parts of the UK posted a slowdown in annual growth. 

Northern Ireland continues to report the strongest annual growth at 4.9% with an average house price of £186,459. It was followed by the West Midlands which reported a 3.8% growth and average property values of £248,308.

In Wales, where the average home now stands at £213,959, the rate of annual property price inflation slowed to 1% in March. In Scotland, the annual rate of growth fell to 2.3% to take average property values to £199,853. 

Average house prices in London were up only marginally by 0.1% compared to this time last year. A typical property in the capital in March costs £537,250. 

Jeremy Leaf, an estate agent, commented: “After three successive months of unchanged annual growth, this respected and comprehensive report confirms what we’re seeing on the ground – falling mortgage rates and expectations that the worst for the economy may be behind us have tempted buyers and sellers out of hibernation.”

But Alice Haine, personal finance analyst at Best Invest, warned: “While the worst of the cost-of-living crisis appears to be behind us, the outlook for house prices is uncertain as households still have a number of personal finance challenges to contend with that may affect their buying power.”

5 April: Zoopla Finds Room For Optimism As Growth Falls

• Annual house price growth 4.1%, down from 9% in March 2022
• Month-on-month fall from 5.3% in February
• Sellers settling for average 4% asking-price discounts
• 65% rise year-on-year in properties for sale

House price growth is continuing to slow but the market remains resilient, according to the latest figures from property website Zoopla, writes Jo Thornhill.

Zoopla’s house price index for March shows annual house price growth at 4.1%, down from 5.3% in February and from 9% a year ago. Average prices have fallen by 1% since October 2022 and the quarterly growth rate has been negative for the last three months – the weakest level of house price growth since 2011.

The national average house price has dropped by £1,100 from £260,800 in February to £259,700 in March, according to Zoopla.

Yet despite the slowdown, market conditions are better than expected, according to the online portal. New ‘sales agreed’ data for the past nine months indicates that 500,000 sale completions are expected to go through in the first six months of 2023.

Buyer demand is also at a higher than expected level – its highest since October last year when the fallout from the mini Budget hit housing market activity – and sales activity is supported by a boost in the supply of homes for sale. There are 65% more properties on the market compared to March 2022, with a higher number of sales going through in lower price bands. 

Zoopla reports that a typical estate agent had 25 properties for sale in March compared to a low of 14 at the same time last year.

Richard Donnell, the firm’s executive director, said: “The market is arguably more balanced than it has been for more than three years. Levels of supply have recovered and buyers and sellers are not miles apart on where they see pricing and this means deals are being agreed at an increasing rate. 

“Prices are drifting lower compared to a year ago but fears of a major downturn in prices are overdone. Falling mortgage rates and a strong labour market are supporting activity levels from committed movers who need to be realistic on price if they are serious about moving home in 2023. 

“We expect to see levels of activity continue to steadily improve over Easter and into the summer.”

Zoopla figures show sellers are making modest downward adjustments to their asking prices and are conceding discounts averaging 4% (£14,000) to tempt buyers who have more choice. This is possible thanks to sizable price gains over the last three years, which have given them more room to be flexible on sale prices.

Sam Amidi, head of mortgages at online mortgage broker Better, believes the easing of mortgage rates and the outcome of the recent Budget has brought reassurance for house hunters, while rising rents mean first time buyers are still keen to get a foothold on the ladder: “While we could still expect some turbulence, we still see lenders reducing their fixed mortgage rates on a regular basis making home ownership more affordable again. This along with increased rents is making buying the more favourable option.”

31 March: Nationwide Sees Prices Continue Downward Trend

House prices plunged 3.1% in the year to March 2023, their largest decline since 2009, Andrew Michael writes.

According to the Nationwide House Price Index, published today, house prices fell by 0.8% month-on-month from February, their seventh consecutive monthly fall.

The building society said this left house prices 4.6% below their all-time peak reached in August last year.

Last week, the Office for National Statistics also reported a continued fall in house prices. But earlier in March, Rightmove, the online property portal, said the average price of properties coming to market was up by 0.8% compared with the previous month.

The Bank of England raised its Bank Rate to 4.25% on 23 March, its eleventh consecutive rise since December 2021. Now at its highest level since 2008, the heightened rate has applied further upward pressure on the cost of borrowing, with a knock-on effect being played out in the UK’s property market.

Nationwide said all of the UK’s regions experienced slowing house price growth in the first quarter of this year, with most seeing small year-on-year falls.

Most resilient was the West Midlands, where prices were up 1.4% year-on-year to March this year. The weakest performer was East Anglia where house prices fell by 1.8% over the past 12 months.

Robert Gardener, Nationwide’s chief economist, said: “The housing market reached a turning point last year as a result of the financial market turbulence that followed September’s mini-Budget. Since then, activity has remained subdued.

“The number of mortgages approved for house purchase remained weak at 43,500 cases in February 2023, almost 40% below the prevailing level a year ago.”

Nicky Stevenson, managing director of nationwide estate agency chain Fine & Country, said: “The fall in house prices in March is not unexpected, but all signs point to this motivating buyers as the housing market starts gearing up for the traditionally busy Easter period.

“Sellers are being realistic about the level they market their home at, and these lower prices are in turn incentivising buyers to start viewings.”

22 March: Annual House Price Inflation Remains On Downward Path, Says ONS

Property prices are continuing to come off the boil, according to the latest data from the Office of National Statistics (ONS), which reveals a third consecutive fall in annual house price inflation, writes Laura Howard.

Average UK house prices stood at £290,000 in January 2023 – a figure that’s £17,000 higher compared to January last year. However, it puts the annual rate of inflation at 6.3%, which is notably lower than the 9.3% posted by the ONS in December, and the 10.2% it posted in November.

On a monthly basis (seasonally adjusted), average UK house prices fell by 0.6% in January, following a decrease of 0.4% in December 2022.

But, as ever, the UK-average figure masked considerable variations among the home nations. 

Northern Ireland saw the strongest growth in the 12 months to January at 10.2%, bringing the value of an average home in the country to £175,000. 

In England, house prices rose by 6.9% over the period to reach an average value of £310,000.

Annual price growth in Wales stood at 5.8% taking average property values to £217,000, while Scotland posted growth of just 1.0% and average values of £185,000. 

On a regional basis, within England, the North East saw the highest annual percentage change at 10%, while London posted the lowest at 3.2%. 

However, the North East still has the lowest average house prices in the UK at £163,000, while London has the highest at £534,000.

The ONS is the latest of a ‘mixed bag’ of leading house price indices to be published in recent days and weeks. Nationwide posted a 1.1% fall in property values in the 12 months to February, whereas figures from Halifax showed prices had risen by 2.1% over the same period. 

Rightmove – which reports property asking prices on its portal – puts annual house price growth at 0.8% in March. 

However the ONS uses Land Registry data which can be several months old and may not reflect the full impact of factors such as rising mortgage rates and inflation on the housing market. 

Myron Jobson, senior personal finance analyst at interactive investor, explained: “The reality is there is a collection of micro-markets at play. There are still regions where gazumping and bidding wars are rife, and the opposite is true in other parts of the nation. 

“Estate agents have reported that a lack of supply in larger property have kept prices inflated, as the race for space theme continues to play out.”

Jonathan Hopper, chief executive of Garrington Property Finders, added: “The pinch point is first-time buyers and second-steppers, for whom the sticky mortgage market remains a major barrier.”

The Bank of England’s latest announcement on interest rates, which largely determine the price of mortgages, is due at midday tomorrow (23 March). 

With the latest inflation figure for February – also published today by the ONS – higher than expected at 10.4%, the likelihood is growing that the Bank rate could be pushed up to 4.25% or even 4.5% from its current level of 4%.

20 March: Rightmove Sees Signs Of Spring Growth

Rightmove, the online portal used by estate agents to showcase properties, says the average price of properties coming onto the market in March is up 0.8% on last month, standing at £365,357.

This figure is more than £100,000 higher than estimates from other leading analysts, including lenders Halifax and Nationwide and rival portal Zoopla (see stories below).

According to Rightmove, annual house price growth stands at 3%, with asking prices now £5,800 below the peak reached in October 2022.

It says typical first-time buyer properties – those with two or fewer bedrooms – are proving most popular, with average prices for this type of home just £500 lower than last autumn.

Sales of larger homes are lagging behind, according to Rightmove, with sales agreed in the last two weeks at 10% behind the same period in 2019.

The 0.8% March price increase is below the average March rise of 1.0% seen by Rightmove over the last 20 years. It says this reflects a higher degree of pricing caution among new sellers than is usually seen at this time of year.

However, it believes recent falls in mortgage interest rates have boosted confidence, leading to an increase in activity towards levels last seen before the Covid pandemic.

The Bank of England’s latest announcement on the Bank rate, which largely determines the price of mortgages, is due on Thursday. It currently stands at 4%, and analysts had been expecting a rise of 0.25 or 0.5 of a percentage point as part of the Bank’s strategy to reduce inflation from 10.1% towards its target of 2%.

However, the Office for Budget Responsibility is forecasting that inflation will fall to 2.9% by the end of the year – sooner than previously forecast. Coupled with turmoil across the international banking sector – some of which is attributed to rising interest rates – this may encourage the Bank to hold its key rate this time around.

Tim Bannister at Rightmove said: “Lagging sales agreed in the larger homes sector are likely to be caused by a combination of factors including fewer pandemic-driven moves to bigger homes, a more cautious approach to trading up due to the cost of living, and even perhaps concern over the running costs of a larger home. 

“Meanwhile sales in the first-time buyer sector are likely being helped by some deposit assistance from family.”

7 March: Halifax Still Seeing Annual Price Growth

• Year-on-year increase of 2.1% for third month running
• Monthly growth at 1.1%, up from 0.2% in January
• Typical UK property costs £285,476, up £3k on month

Figures from Halifax, the UK’s biggest mortgage lender, show property prices rising 2.1% in the year to February, and 1.1% month on month.

The typical UK property is valued at £285,476 by Halifax, up from £282,360 in January. This is significantly ahead of the latest values quoted by Nationwide (£257,406) and Zoopla (£260,800), although Rightmove puts the average at £362,452 based on properties listed on its site (see stories below).

Kim Kinnaird, a director at Halifax, says there has been relatively little movement in prices over the last quarter: “Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices following the falls seen in November and December. 

“Still, with the cost of a home down on a quarterly basis, the underlying activity continues to indicate a general downward trend. 

“In cash terms, house prices are down around £8,500 (-2.9%) on the August 2022 peak but remain almost £9,000 above the average prices seen at the start of 2022, and are still above pre-pandemic levels, meaning most sellers will retain price gains made during the pandemic. 

“With average house prices remaining high, housing affordability will continue to feel challenging for many buyers.”

Halifax notes that prices for flats have fallen by 0.3% over the past 12 months, while prices for terraced properties have edged up by 0.3%. Detached properties saw the lowest annual rise since the end of 2019 at 1.5%. 

Figures from the Bank of England show the number of approved mortgages decreased in January by 2.2% to 39,637. This January’s figure was 46% below January 2022. 

Government monthly property transaction data shows UK home sales in January 2023 stood at 96,650, down by 2.6% from December’s figure of 99,260.

1 March: Nationwide Logs First Annual Fall Since June 2020

• February prices down 1.1% on year ago
• First annual fall since depths of pandemic
• Prices 3.7% lower that peak in August 2022

Nationwide building society’s latest house price index for February records a 1.1% year-on-year decrease in values, with prices down 0.5% month-on-month.

This is the sixth monthly fall in a row, and it leaves prices 3.7% below their peak, recorded in August 2022, when the market was at its height following the pandemic slump.

According to Nationwide, the average property now costs £257,406, down from £258,296 logged in January.

Robert Gardner, the building society’s chief economist, said the mini-Budget in September last year, under Liz Truss and Kwasi Kwarteng, triggered turbulence which continues to rock the housing market: “While financial market conditions normalised some time ago, housing market activity has remained subdued.

“This likely reflects the lingering impact on confidence as well as the cumulative impact of the financial pressures that have been weighing on households for some time.”

Mr Gardner says that many would-be house buyers remain spooked by mortgage rates running significantly higher than the lows recorded in 2021, with confidence further shaken by double-digit inflation and relatively low wage growth. 

He says that, despite improvements in consumer confidence in recent months, it remains below levels recorded during the 2008 financial crisis.

Looking forward, Mr Gardner says economic conditions will continue to weigh heavily on both buyers and sellers: “It will be hard for the market to regain much momentum in the near term since economic headwinds look set to remain relatively strong.

“The labour market is widely expected to weaken as the economy shrinks in the quarters ahead, while mortgage rates remain well above the lows prevailing in 2021.”

“Indeed, despite the modest fall in house prices, for a prospective first-time buyer earning the average income looking to buy the typical home, mortgage payments remain well above the long run average as a share of take-home pay.”

Additionally, he says deposit requirements remain prohibitively high for many, with saving for a deposit continuing to be a struggle given the rising cost of living: “This is especially the case for those in the private rented sector, where rents have been rising strongly.”

On a more optimistic note, Nationwide says conditions will gradually improve if inflation falls in the coming months as expected, and the combination of rising incomes and weak or declining prices improves affordability.

28 February: Zoopla Expects Prices To Fall 5% In 2023

Annual house price growth slowed to 5.3% in January, according to property website Zoopla, prompting the property portal to forecast price falls for the year of around 5%, writes Jo Thornhill.

Last month’s year-on-year price increase is down from the 6.5% annual growth reported in December 2022, and the 8.6% year-on-year growth seen in January 2022. The average UK house price, by Zoopla’s reckoning, is now £260,800.

If the price fall prediction is accurate, this figure would come down to around £247,000.

The portal says buyer demand and sales volumes are 20% to 50% lower than a year ago, but slightly up on the levels of the pre-pandemic years 2017-19, with sellers accepting 4.5% less (£14,100), on average, than their asking price. 

This is the highest discount off asking prices in five years, which Zoopla says is further evidence a buyers’ market is taking hold.

Prospective buyers will also be encouraged by news that the supply of homes for sale has increased and is 60% up on this time last year. The typical estate agency now has 24 homes on the market compared to just 15 a year ago. 

Zoopla reports that sellers are adjusting their prices, with 40% of homes listed on its site having reduced their original asking price. It is predicting price falls of around 5% on average for the year.

Other figures released by Halifax, part of the Lloyds banking group, show house prices have soared by a fifth since January 2020 – up 20.4% (£48,620 on average).

The former building society, which is the UK’s biggest mortgage lender, says the average UK property was worth £287,515 in December 2022, up from £237,895 in January 2020. In the three years before the pandemic (2017-19) average house prices grew by 7.8%.

Larger homes and detached properties have seen the biggest average price jumps, a fact attributed to the desire for more space since the lockdowns and the increase in the number of people working from home. 

The average detached property is worth £100,000 more (at £453,070) compared to the start of the pandemic, a 25.9% increase. In contrast, the average price of a flat was up 13.3% over the same period.

Regionally, Wales saw the strongest house price growth at 29.3%, with average prices now standing at £217,328up,  from £168,101 in January 2020.

Kim Kinnaird, mortgages director at Halifax, says: “The pandemic transformed the shape of the UK property market, and while some of those effects have faded over time, it’s important we don’t lose sight of the huge step-change seen in average house prices.

“Heightened demand created a much higher entry point for bigger properties right across the country, and that impact is still being felt today by both buyers and sellers, despite the market starting to slow overall. 

“Taking detached houses as an example, average prices remain some 25% higher than at the start of 2020. Even if those values were to fall by 10%, they would still be around £50,000 more expensive than before the pandemic.”

20 February: Asking Prices Stall As Market Pauses For Breath

Online property website Rightmove says asking prices were almost flat in February, confounding expectations that values would fall, writes Laura Howard.

The average cost of a home listed by new sellers on the Rightmove portal climbed by just £14 in February to £362,452. This is the smallest increase ever recorded by Rightmove between January and February –  traditionally strong months for the property market as spring approaches.

The belief is that sellers may be responding to tougher conditions with more realistic pricing.

Demand is also stronger than many expected after a year of interest rate hikes, soaring living costs and economic turbulence. The number of potential buyers making enquiries with Rightmove agents in the last two weeks is up by 11% compared with the same period in the relatively ‘normal’ pre-Covid market of 2019.

There is still a shortage of property for sale, with numbers down by 11% in February compared to 2019. However, volumes are continuing to recover – from 15% down at the start of the year, and 30% down in the aftermath of the mini-budget in September.

The number of available homes for sale is up by a significant 48% on the record low levels of 2022.

The first-time buyer sector is demonstrating the strongest signs of recovery, said Rightmove, with numbers down by just 7% in February compared to the same month in 2019. 

It suggests that those in a position to buy are keen to nail down a purchase in the face of rocketing rental costs and a continued desire to own their own home. 

Settling mortgage rates could also be a driver behind the increasing numbers of first-time buyers taking the plunge. Average costs for a five-year fixed rate mortgage with a 15% deposit are now pegged at 4.82% compared to 5.90% in October.

Tim Bannister, director of property science at Rightmove, said that the emerging ‘slower-paced, greater choice’ market will support the many buyers who need time to organise a mortgage – and who have been losing out to the frenzied ‘best bid’ scenarios of recent years.

He said: “Our key indicators now point to a market which is transitioning towards a more normal level of activity after the market turbulence at the end of last year. 

“Agents are reporting that they are now increasingly seeing buyers who have more confidence and more choice – albeit with revised budgets – to accommodate higher mortgage rates.”

Mr Bannister added: “It’s a positive sign for the market to see many in the first-time buyer sector getting on with their moves, though despite average mortgage rates having edged down, some first-time buyers will still be priced out of their original plans and may need to look for a cheaper property, save a bigger deposit, or factor higher monthly mortgage repayments into their budgets.”

15 February: House Prices Continue To Ease In December – ONS

Average UK house prices stood at £294,000 in December 2022, according to the latest figures from the Office of National Statistics (ONS) – £26,000 higher than the same month a year earlier, writes Andrew Michael.

The ONS said house prices grew by 9.8% on average over the 12 months to December, down from 10.6% recorded a month earlier.

But the latest figure masked considerable variations among the home nations.

England and Wales both recorded an annual growth rate of 10.3%, while the figure was 10.2% for Northern Ireland. In Scotland, however, prices only rose by 5.7% over the same period. The ONS said that house price inflation in Scotland had continued to slow from April 2022 onwards.

There was also a mixed picture for house prices at a regional level around the UK.

The East Midlands recorded the highest growth rate in the year to December at 12.3%. This was followed by the North West of England and Yorkshire & Humber with figures of 12.2% and 11.8% respectively.

In contrast, London considerably lagged all of the other English regions with an annual growth rate of 6.7%.

Chris Jenkins, assistant deputy director of prices at the ONS, said: “Annual house price inflation, measured using final transaction prices, slowed again in December across the majority of the nations and regions. The East Midlands showed the highest annual growth, while Scotland remains the slowest growing part of the UK.”

Nick Leeming, chairman of estate agent Jackson-Stops, said: “Despite the brakes on house price growth, the market is showing green shoots as we head closer towards Spring. On an annual basis, sellers continue to be in a fortunate position, still able to achieve strong returns with the average house price £26,000 higher than a year prior.”

Nicky Stevenson, managing director at estate agent Fine & Country, said: “The market is stabilising after two years of frenzied activity, and we are seeing a gradual return to pre-pandemic norms in terms of stock levels and time taken to secure a sale.”

Both agents pointed out that the mortgage market is bouncing back since last year’s mini-Budget. There are currently more than 4,300 residential mortgage deals available, according to data provider Moneyfacts – the highest level recorded in the last six months.

7 February: Halifax Sees Prices Stabilise After Recent Falls

• Typical property at £281,684, effectively same as December
• Price stability follows falls of 1.3% in December and 2.4% in November
• Annual price growth in January eases to 1.9% from 2.1% in December

Halifax, Britain’s biggest mortgage lender, says stability returned to the UK housing market in January after falls in the value of a typical property in the closing months of 2022.

The January 2023 figure of £281,684 edged down from £281,713 in December.

This time last year, a typical property cost £276,483, making the year-on-year increase 1.9%, itself a decline from the annual rate of house price inflation of 2.1% in December.

At the start of 2022, annual price inflation was running at 9.6%. According to Halifax, prices peaked in June last year at 12.5%.

Kim Kinnaird at Halifax Mortgages said: “The start of 2023 has brought some stability to UK house prices, with the average house price remaining largely unchanged in January. This followed a series of significant monthly falls at the end of last year. 

“The pace of annual growth at 1.9% is the lowest level recorded over the last three years. The average house price is around £12,500 below its peak in August last year of £293,992, though it still remains some £5,000 higher than in January 2022 (£276,483). 

Ms Kinnaird says the January figures are in line with economic reality: “We expected the squeeze on household incomes from the rising cost of living and higher interest rates to lead to a slower housing market, particularly compared to the rapid growth of recent years. 

“As we move through 2023, that trend is likely to continue as higher borrowing costs lead to reduced demand. 

“For those looking to get on or up the housing ladder, confidence may improve beyond the near-term. Lower house prices and the potential for interest rates to peak below the level being anticipated last year should lead to an improvement in home buying affordability over time.”

1 February: Prices Tumble To 3.2% Below August 2022 Peak

Nationwide building society’s latest house price index, out today, shows the annual rate of price growth slowing from 2.8% in December 2022 to 1.1% in January 2023.

Month on month, prices fell 0.6%. This means prices this year are now 3.2% below where they stood in August 2022.

Robert Gardner, Nationwide’s chief economist, said the prospects for the year ahead will be shaped by the cost of borrowing: “There are some encouraging signs that mortgage rates are normalising, but it is too early to tell whether activity in the housing market has started to recover.

The fall in house purchase approvals in December reported by the Bank of England (see story below) largely reflects the sharp decline in mortgage applications following the mini-Budget [in September 2022].

“It will be hard for the market to regain much momentum in the near term as economic headwinds are set to remain strong, with real earnings likely to fall further and the labour market widely projected to weaken as the economy shrinks.”

The Bank of England will announce its latest Bank rate figure tomorrow (Thursday). This will influence the direction of mortgage interest rates, although many lenders have already priced in an increase from the Bank rate’s present 3.5% level to 4%.

Mr Gardner said that, if recent reductions in mortgage rates continue, this should help improve the affordability position for potential buyers.

He also pointed out that “solid” rates of income growth will help sustain the housing market, especially if combined with weak or negative house price growth. Wage growth is currently running at around 7% in the private sector.

That said, he expects the overall affordability situation to remain challenging in the near term: “Saving for a deposit is proving a struggle for many given the rising cost of living, especially those in the private rented sector, where rents have been rising at their strongest pace on record, according to data extending back to 2005 for England.”

30 January: ‘Slow Burn’ Rise In Demand As Price Growth Slows

House price growth slowed last year, with buyers waiting to see if asking prices and mortgage rates fall further, according to figures from property website Zoopla, writes Jo Thornhill.

The figures show that, while house prices were up 6.5% annually in December last year, this is a drop from the 7.2% annual rise in the previous month, and the 8.3% increase recorded at the end of 2021. 

But Zoopla reports encouraging signs that demand has rebounded at the start of 2023 with buyer numbers back to pre-pandemic levels, similar to 2018 and 10% higher than in 2019, reflecting a ‘slow burn’ but promising start to the year. 

But the property platform says activity is still well below the levels seen in January in the past few years.

Among other trends there has been an increase in the number of buyers looking for one- and two-bedroom flats – particularly in towns close to major cities – with Slough, Watford, Huddersfield and Stockport among the more popular options. 

More than one quarter (27%)  of buyers were looking for flats in January – up 5% compared to a year ago.

In contrast, the share of demand for three-bed houses has fallen 5% to 39%, although they are still the most in-demand homes nationally. 

Richard Donnell at Zoopla, said: “The first few weeks of the year have got off to a stronger start than might have been expected given how market activity stalled at the end of 2022. 

“There has been a clear shift towards flats as the early buyers focus on value-for-money and adjust expectations given the hit to buying power from higher mortgage rates. A proportion of existing homeowners are holding back waiting to see if sizable price falls materialise, and how far mortgage rates fall back before entering the market. 

“We believe demand for homes has room to improve further in the coming weeks. Anyone serious about selling needs to be realistic on the asking price and needs to ensure this is in line with what buyers are prepared to pay.”

27 January: Rents Hit Record Highs As Demand Outstrips Supply

Rents across the country are at record highs, according to Rightmove, writes Jo Thornhill.

Outside London, they stand at an average of £1,172 a month, an almost 8% increase compared to a year ago.

In the capital, the average asking rent has reached a record at £2,480 per month, while for inner London average rents surpassed £3,000 for the first time. 

Last year saw the second biggest annual increase in rents for newly-listed properties, behind only the rise seen in 2021.

Rightmove is predicting average asking rents will continue to rise by an estimated 5% this year unless there is a significant increase in the number of available homes to let.

The property platform cites the imbalance between demand and supply for pushing up asking rents. But it says there are encouraging signs for tenants that competition for available properties is easing slightly.

It says the number of properties for rent in December 2022 was 13% higher than in December 2021 – the biggest annual jump since 2013. Competition between tenants for properties dropped by 6%, compared to the same time last year. 

Wales and the South West have seen the biggest uplift in the number of available properties, by 15% and 13% respectively. This has led to a 1% drop in respective average asking rents, the first quarterly drop in average asking rents for any region since the beginning of 2021.

That said, the number of properties to rent nationally is still down by 38% compared with pre-pandemic levels in 2019, while the number of people enquiring about a property to rent is 53% higher than three years ago. 

Tim Bannister at Rightmove’s said: “Although the fierce competition among tenants to find a home is starting to ease, it is still double the level it was back in 2019. Letting agents are seeing extremely high volumes of tenant enquiries and dealing with tens of potential tenants for each available property.

“There appears to be some more property choice for renters compared to the record low levels of last year, which would slightly ease the fierce competition to secure a home. This is why we’re forecasting that the pace of annual growth will ease to around 5% by the end of the year nationally, although this would still significantly exceed the average of 2% that we saw during the five years before the pandemic.”

18 January: ONS Sees Prices Cool In Wake Of Market Upheaval

Average house prices grew by 10.3% in the year to November 2022, down from October’s figure of 12.4%, according to data from the Office for National Statistics and the Land Registry, writes Jo Thornhill.

The figures point to a cooling of the housing market at the end of last year in the wake of the Liz Truss/Kwasi Kwarteng mini-Budget in September, which rocked market confidence and led to an increase in mortgage rates.

ONS data also shows that the average UK house price was £295,000 in November 2022 – £28,000 higher than in the same month in 2021 – but this was a slight decrease on the previous month’s £296,000. 

Average house prices increased over the year in all regions, to £315,000 (up 10.9%) in England, £220,000 in Wales (up 10.7%), £191,000 in Scotland (up 5.5%) and £176,000 in Northern Ireland (up 10.7%).

The ONS said Scotland’s annual house price inflation had been slowing since April last year, reaching 5.5% in the year to November 2022, down from 14.2% in the year to April 2022. 

The North West of England saw the highest annual percentage change in the year to November 2022 ( up 13.5% on 2021), while London saw the lowest (up 6.3%) of all English regions.

Jason Tebb, chief executive at property search website OnTheMarket.com, said: “This data may be a little historic but shows a slowdown in annual price growth which many expected. 

“Continuing upheaval, changes in the macro-economic climate and the chatter around mortgage rates, with fixes in particular much higher than borrowers have become accustomed to, are all bound to have affected the confidence of the average property-seeker.

“That said, while the market continues to rebalance, it is doing so in a reassuringly measured way rather than a drastic readjustment. There will always be those who need to move, and properties which are priced effectively should lead to successful transactions, even in a tougher market.”

Nick Leeming, chairman of estate agent Jackson-Stops, said: “The question on the market’s lips is whether we’ve reached the peak of house prices or if there is still more space to climb. There was a sense that a quietened festive period would allow supply and demand levels to balance out, but the sheer level of competition that remains underpins the strength in the market to ensure a soft landing on predicted price falls.

“It is important to remember that borrowing remains accessible – mortgage rates have now fallen to their lowest for three months. House prices are much steadier than six months ago, with previous wild spikes in values now cooling back down to the realms of normality.”

16 January: Asking Prices Rise But Sellers Urged To Be Realistic

Property portal Rightmove says the average asking price of property listed on its website this month is up by 0.9% (or £3,301) compared to December, writes Laura Howard. 

The rise follows two consecutive falls in asking prices in November and December, of 1.1% and 2.1% respectively. It also marks the biggest increase at this time of year since 2020.

The number of prospective buyers making enquiries with estate agents listed on the portal also rose by 4% compared to the same period in pre-Covid 2019. And it is up by 55% compared with the two weeks before Christmas, as sellers test the cooling property market.

Rightmove says the figures are encouraging and may signal the return of a calmer, more measured market following the economic chaos last autumn triggered by the Liz Truss/Kwasi Kwarteng mini-Budget in September.

However, even factoring in the New Year boost, asking prices are still 2% – or £8,720 – below their peak in October last year.

According to Tim Bannister, director of property science at Rightmove, sellers should remain realistic: “The early-bird sellers who are already on the market and have priced correctly are likely to reap the benefits of the bounce in buyer activity, while over-valuing sellers may get caught out as property stock builds over the next few weeks and months, and they experience more competition from other better-priced sellers in their area.”

Mr Bannister added that, for the vast majority of sellers, a drop in asking price is not an actual loss compared to what they paid for their home – only a failure to live up to aspirations.

He advised: “Listening to your estate agent’s advice about your hyper-local market and pricing right the first time can avoid a stale sale and the need for even greater reductions later.”

Six of the nine UK regions saw asking price rises in January compared to last month – Wales, North West, East Midlands, West Midlands, London and South East. Of these, East Midlands saw the greatest jump in average asking prices of 1.8%.

The three regions reporting falls were South West, Yorkshire & Humber and East of England, with the steepest fall in the South West at just 0.4%. 

Average asking prices in every region were higher than in January 2022, with Yorkshire & Humber leading the way with an annual rise of 9.5%.

Across all the regions, average asking prices were up by 6.5% compared to last January.

The number of available homes for sale is still well below long-term norms. Rightmove says it expects the full effect of affordability constraints and last year’s mortgage rate rises to hold back some segments of the market in the first half of the year.

10 January: Average Profits From Property Sales Topped £100,000 In 2022

Average long-term homeowners in England and Wales made a record profit of more than £100,000 when they sold their properties last year, according to estate agents Hamptons, Andrew Michael writes.

Several of the UK’s leading house price indicators have reported a slowdown in the housing market towards the end of 2022.

But, according to Hamptons, the average seller in England and Wales who bought a property during the last two decades and then sold up last year, made a gross profit of £108,000. See table below.

This is the first time a six-figure return has been recorded. The gross profit figure for 2021 stood at £96,220.

Hamptons said that a record 94% of sellers sold their properties in 2022 for more than they paid for it, having owned their home for an average of nearly nine (8.9) years. In percentage terms, the average seller in England and Wales sold their home for 52% more than they paid for it.

The company added that homeowners made six-figure gains last year in just over half (173) of all local authority areas in England and Wales, compared to a figure of 116 in 2021. The vast majority of this year’s six-figure beneficiaries (87%) were found in the south of England.

Hamptons said that London is the only region where the average household gain exceeded £100,000 in every one of its local authority jurisdictions. Average profits of more than £200,000 were recorded in 17 of London’s boroughs. This included Kensington & Chelsea where the average profit figure on properties held for 10.4 years came in at £684,510.

Slower house price growth in the capital over the last few years, however, meant that sellers in Wales made larger percentage gains than their London equivalents. Last year, the average home in Wales sold for 59% more than its purchase price, compared with 57% for London.

Hamptons said that the hike in the average amount of money people have made on their property has been driven by an increase of larger homes being sold last year.

Aneisha Beveridge, head of research at Hamptons, said: “House price gains are primarily driven by two factors: the length of time people have owned and the point at which they bought and sold in the house price cycle. 2022’s record-breaking gains were boosted by Covid-induced changes, with a rising share of sales coming from larger family homes that were typically bought before the financial crisis.

“Even if prices do fall this year, it’s likely that over 90% of sellers will still sell at a profit,” Ms Beveridge added.

6 January: Prices Slide For Fourth Consecutive Month – Halifax 

• House prices fell 1.5% in December
• Typical home costs £281,272 
• Prices forecast to slump 8% in 2023

House prices fell in December, continuing their downward trajectory in the latter months of 2022, according to the latest Halifax house price index, writes Laura Howard. 

They dropped by 1.5% in December, following a 2.4% fall in November. The annual rate of growth more than halved, from 4.6% to 2%.  

The cost of a typical UK home last month stood at £281,272, down from £285,425 the previous month.

Kim Kinnaird, director at Halifax Mortgages, said: “As we’ve seen over the past few months, uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, is leading to an overall slowing of the market.”

However, December’s fall – the fourth in a row – was less pronounced than the 2.4% recorded in November, even when factoring in the traditional market slowdown over the festive period.

All nations and their regions saw price rises compared to 2021, although the rate of annual inflation slowed, according to Halifax.

Homes in the North East saw the greatest slowdown in growth, with annual house prices in December rising by 6.5%, compared to 10.5% the previous month. An average home in the region now costs £169,980.

The East of England was among the regions least affected by annual price falls, with a growth rate of 5.5% to December compared to 7.2% in November. Buyers in the area will now pay an average £337,215 for a home.

Property values in Wales also remained comparatively strong with an annual growth rate of 6.1%, compared to 7.7% the previous month. Homes in the country now cost an average of £217,547.

House prices in Scotland now stand 3.5% higher than last year at an average of £200,166. This compares to annual growth of 6.4% the previous month – marking the second steepest slowdown after the North East of England.

Northern Ireland posted annual inflation of 7.1%, compared to 9.1% in November, with average homes now costing £183,825.

Average prices in London now stand at £541,239, a growth of 2.9% annually, compared to 5% last month.

Ms Kinnaird said: “As we enter 2023, the housing market will continue to be impacted by the wider economic environment and, as buyers and sellers remain cautious, we expect there will be a reduction in both supply and demand overall, with house prices forecast to fall around 8% over the course of the year.”

However, the cost of UK property is still higher than at the start of 2022 and more than 11% more than the start of 2021, says Halifax.

House prices have grown by 974% in the 40 years since Halifax’s House Price Index was established. In January 1983 an average UK home cost £26,188, and interest rates were 11% compared to 3.5% today.

30 December: Nationwide Expects 5% ‘Modest Decline’ In Prices In 2023

• Annual house price growth slows to 2.8% in December
• Monthly figure improves to minus 0.1%
• Prices to fall by around 5% in 2023

Further evidence of the slowdown in the housing market can be seen in today’s Nationwide House Price Index.

The building society says house price growth in the year to December was 2.8%, sharply down from the 4.4% recorded in November.

Month on month, prices fell 0.1% in December, an improvement on the 1.4% fall seen a month earlier.

Robert Gardner, Nationwide’s chief economist, said: “December marked the fourth consecutive monthly price fall – the worst run since 2008, which left prices 2.5% lower than their August peak, after taking account of seasonal effects.

“While financial market conditions have settled, mortgage rates are taking longer to normalise and activity in the housing market has shown few signs of recovery.

“It will be hard for the market to regain much momentum in the near term as economic headwinds strengthen, with real earnings set to fall further and the labour market widely projected to weaken as the economy shrinks.”

Mr Gardner says the recent decline in mortgage applications may be due to the Christmas break, suggesting that potential buyers may be waiting until the new year to see how mortgage rates evolve before deciding to step into the market.

He said: “Longer-term interest rates, which underpin mortgage pricing, have returned towards the levels prevailing before the mini-Budget [in September]. If sustained, this should feed through to mortgage rates and help improve the affordability position for potential buyers, as will solid rates of income growth, especially if combined with weak or negative house price growth.”

However, he says the well-being of the market, as far as stable house prices are concerned, depends on benign economic conditions limiting the number of people who may be forced to sell their homes: “Most forecasters expect the unemployment rate to rise towards 5% in the years ahead – a significant increase, but this would still be low by historic standards.

“Moreover, household balance sheets remain in good shape with significant protection from higher borrowing costs, at least for a period, with around 85% of mortgage balances on fixed interest rates. 

“Affordability testing has been central to mortgage lending since the financial crisis [in 2008] and is typically stress-tested at an interest rate above those prevailing at the moment. This means that, while it will be difficult, the vast majority of those refinancing should be able to cope.”

Nationwide expects to see a ‘modest decline’ in house prices in 2023 of around 5%. It says a significant deterioration in the labour market or higher mortgage rates would be needed to cause the double-digit declines suggested by other forecasters.

22 December: Zoopla Expects Prices To Tumble In 2023

Average UK property values rose by 7.2% to £258,100 in the year to November 2022, a cash increase of £17,500, according to today’s Zoopla’s house price index, Andrew Michael writes.

The figure is on a par with the 7.1% recorded in the 12 months to November last year, but the property portal warned that momentum in the housing market is “falling away rapidly”.

Zoopla said the underlying rate of quarterly price inflation has slowed from more than 2% during the summer to just 0.3% in the last 3 months, which equates to an annualised growth rate of just 1.4%.

It expects to see quarterly price falls in the first half of 2023, which will result in the annual growth rate turning negative by the middle of the year.

Zoopla says September’s mini-Budget under Liz Truss and Kwasi Kwarteng, after which mortgage rates climbed to recent record highs of 6.5%, had “brought the housing market to a near standstill in the last quarter of 2022”.

The property portal reports that demand for homes is down 50% year-on-year, while the number of properties sold subject to contract has dropped by 28% over the same period.

It says the flight to rural and coastal locations – a consequence of the sharp rise in the number of people working from home during the Covid-19 pandemic – has begun to run out of steam.

The slowdown has hit demand in parts of southern England, including east Kent, Portsmouth and Torquay, along with the Lake District and mid-Wales.

At the same time, buyer interest has remained stronger in urban settings where jobs have been created and where services are more prevalent. These include Bradford, Swindon, Coventry, Crewe and Milton Keynes.

According to Zoopla’s data, annual house price growth in several cities outperformed the national picture.

Nottingham was the top performer in the 12 months to November 2022, with a figure of 11.1%, followed by Leeds (9.3%) and Birmingham and Manchester (both 9.2%). 

With a figure of -0.7%, Aberdeen was the only one of 20 cities monitored by Zoopla to record a fall in house price growth over the period.

Several UK regions also recorded annual high price growth that exceeded the national average. Top of the list was Wales (9.2%), followed by the south-west of England (8.5%), the West Midlands (8.4%) and the East Midlands (8.3%). Bringing up the rear was London (4.1%).

Richard Donnell, executive director at Zoopla, said: “We expect buyers to return to the market in the New Year, but they will be far more cautious and price sensitive. Serious sellers need to be realistic on price and get the advice of an agent on how to market their home.”

16 December: Halifax Predicts 8% Fall In House Prices In 2023

Halifax, Britain’s biggest mortgage lender, says house prices will fall by 8% next year.

Andrew Asaam, homes director at the lender, said: “As the increasing cost of living puts more pressure on household finances and rising interest rates impact customers’ monthly mortgage payments, there’s understandably now more caution among both buyers and sellers – particularly following recent market volatility – which has seen demand soften as people take stock.

“Looking ahead to next year, it will clearly be a more challenging economic environment and the housing market will continue to rebalance to reflect these new norms. Though the limited supply of properties for sale will continue to support prices, the pandemic-driven surge in demand has receded, and we’re emerging out of more than a decade of record low interest rates.”

Economists say unemployment will rise next year towards 5.5%. While this is relatively low by historical standards, it will put extra stain on the housing market, along with rising household expenses – particularly energy bills when the Energy Price Guarantee is adjusted upwards next April – putting more pressure on spending power. 

Mr Asaam said: “We expect that UK house prices will decrease by around 8% next year. To put this into perspective, such a fall would place the average property price back at roughly the level it was in April 2021, reversing only some of the gains made during the pandemic.

“There is still uncertainty around this forecast, with the trajectory for Bank Rate (now expected to peak at 4%) and unemployment levels key to determining any future changes.”

Figures from Halifax show that:

• the average UK house price is now £285,579 compared to £272,778 a year ago, a rise of £12,801
• annual house price growth is 4.7% (year to November 2022), having peaked at 12.5% in June this year, which was the strongest rate of annual growth since January 2005
• average property prices are £46,403 (19.4%) higher than at the onset of the pandemic
• a new record high average property price was set in August 2022 (£293,992)
• the typical UK house price has increased by 71% over the last decade (£166,627 in November 2012), a rise of £118,953.
• properties sold to first-time buyers recorded a lower rate of annual house price inflation (3.6%) than home-movers (5.3%) over the last year to the end of November.

14 December: ONS Reports 12.6% Rise In Property Prices 

• Prices up 12.6% in year to October 
• Prices up 0.7% month-on-month
• Average UK property worth £296,000

Average UK property prices rose by 12.6% in the 12 months to October 2022, according to data from the Office for National Statistics, writes Bethany Garner.

The figure is a marked increase from the annual growth rate of 9.9% recorded in September. However, the ONS says this rise is explained largely by the Stamp Duty Land Tax holiday in effect from 1 July to 30 September 2021. 

As buyers rushed to complete their purchase before the holiday period expired, prices in October were depressed, meaning today’s year on year growth rate is calculated from a low base.

It should also be noted that other indices measuring price movements since October, from the likes of Halifax, Nationwide and Rightmove, have shown growth at much lower levels (see stories below).

According to ONS, the average UK property cost £296,000 in October 2022, representing an increase of £33,000 compared with a year previously.

Between September and October 2022, house price growth stood at 0.7% — slightly up on the 0.5% the ONS reported between August and September. 

Myron Jobson, senior personal finance analyst at Interactive Investor, said: “The reverberations of the violent gyrations in the money market in the fallout from the mini-Budget in late September wreaked havoc on the mortgage marketplace — the full impact of which is only now starting to filter through to the property market.”

Regional house price growth in October was greatest in the North East of England at 17.3%, marking a stark change from September, when the region saw lower house price growth than any other UK region at 6.7%.

Conversely, London has seen the lowest annual house price inflation, with average prices increasing by 6.7% in the year to October. According to ONS data, the average property in the capital cost £542,000 in October. 

ONS says there were an estimated 108,480 residential transactions in the UK in October 2022. This is 2.3% higher than September 2022, and 38% higher than October 2021.

12 December: Rightmove Reports Annual Price Rise But Sees Fall In November 

• Annual growth rate slips to 5.6% 
• Prices down 2.1% month-on-month
• Typical asking price drops £8,000 

Average UK property prices rose 5.6% in the year to December according to the latest data from Rightmove, writes Bethany Garner. 

This represents a fall from the 7.2% annual growth rate recorded in November.

North East England saw the highest year-on-year price growth. Average house prices in the area rose 10.3% in the 12 months to December.

South East England experienced the lowest annual inflation at 4.4%, while prices in London rose by 4.6%.

Month-on-month, prices fell by 2.1%. According to the property website, the average home listed on its portal now costs £359,137. This is £7,862 down on last month’s figure of £366,999.

Sellers tend to reduce asking prices in the run up to Christmas, but Rightmove says this latest decrease is the largest monthly drop in four years. 

Regionally, South West England experienced the sharpest monthly drop, with average property prices declining by 3.4%. In London, prices dropped 2.3%, while the South East saw a 2.7% monthly decrease.

Prices dropped least in the North East of England, falling just 0.9%.

Tim Bannister at Rightmove, said: “The price drop is an understandable short-term reaction to the economic turmoil we saw in late September and October, before things began to settle down.

“Despite this we end the year with average asking price growth of 5.6%, which is only slightly lower than the 6.3% last year.”

Rightmove expects average property prices to reduce in 2023, dropping by around 2% as the market moves back towards pre-pandemic activity levels.

7 December: Biggest House Price Falls For 14 Years – Halifax

• House prices fell by 2.3% in November – largest drop since 2008
• Annual rate of price growth down to 4.7% from 8.2% in October
• Typical UK property value now £285,579

Annual house price inflation fell from 8.2% to 4.7% in the 12 months to November, according to the latest figures from Halifax, writes Bethany Garner.

On a monthly basis, prices fell by 2.3% in November, marking the third consecutive monthly drop Halifax has recorded, and the largest monthly decrease since 2008.

Since the beginning of November almost £7,000 has been wiped off the value of a typical UK property, which now stands at £285,579. 

The rate of annual growth fell in every UK region during November with the exception of the North East where it edged up from 10.4% in October to 10.5%.

Wales and the South West of England saw the sharpest reduction in annual price growth. In Wales, growth dropped from 11.5% in October to 7.9% in November, while in the South West it fell from 10.7% to 8.4%.  

The downward trend is a reversal of the steep price inflation these regions witnessed during the pandemic, which saw a surge towards more spacious and rural areas.

However, London also saw a decline in house price inflation which slowed from 6.6% to 5.2% in November. An average property in the capital now costs £549,160.

Kim Kinnaird, director of mortgages at Halifax, said: “While a market slowdown was expected given the known economic headwinds — and following such extensive house price inflation over the last few years — this month’s fall reflects the worst of the market volatility over recent months.”

She added: “When thinking about the future for house prices, it is important to remember the context of the last few years, when we witnessed some of the biggest house price increases the market has ever seen. 

“Property prices are up more than £12,000 compared to this time last year, and well above pre-pandemic levels.”

1 December: Nationwide Sees Growth Rate Tumble In November

• Annual price growth slumps to 4.4%
• Prices fall 1.4% month on month
• Average property price down to £263,788

Nationwide building society’s latest House Price Index, out today, shows that annual growth in prices in the year to November was 4.4% – that’s a steep decline from the 7.2% recorded in the 12 months to October.

Month on month, prices actually fell by a chunky 1.4% – the biggest fall since June 2020, when the country was in the grip of the coronavirus pandemic. The decline comes on top of October’s 0.9% drop.

Nationwide’s average property value for November stands at £263,788, down from the previous £268,282.

Robert Gardner, the building society’s chief economist, said the figures reflect the fallout from the Liz Truss/Kwasi Kwarteng mini-Budget in September: “While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum. 

“Housing affordability for potential buyers and home movers has become much more stretched at a time when household finances are already under pressure from high inflation.”

Mr Gardner believes the market will remain subdued in the coming quarters: “Inflation is set to remain high for some time and Bank Rate [currently 3%] is likely to rise further as the Bank of England seeks to ensure demand in the economy slows to relieve domestic price pressures.

“The outlook is uncertain, and much will depend on how the broader economy performs, but a relatively soft landing is still possible. Longer term borrowing costs have fallen back in recent weeks and may moderate further, especially if investors continue to revise down their expectations for the future path of Bank Rate.”

He also argues that the high proportion of fixed-rate mortgages will protect borrowers from short-term spikes in interest rates: “Household balance sheets remain in good shape with significant protection from higher borrowing costs, at least for a period, with around 85% of mortgage balances on fixed interest rates.

“Stretched housing affordability is also a reflection of underlying supply constraints, which should provide some support for prices.”

28 November: Zoopla Reports 7.8% Price Rise, But Growth Continues To Slow

• Annual house price growth at 7.8% 
• Average property price £261,000
• Price falls of up to 5% predicted for 2023

Average UK property prices rose by 7.8% in the 12 months to October 2022 according to data from property portal Zoopla, writes Bethany Garner.

This represents a slight decline on the annual growth rate of 8.1% recorded the previous month. A typical UK home now costs £261,600.

Properties in Nottingham saw the steepest annual increase of 10.5%, while prices in London grew by just 4.4%. 

Scotland’s Aberdeen was the only city where house prices dropped in the year to October, decreasing by 1.1%.

Zoopla also reported a lag in sales volume — down 28% compared with October 2021, and on-par with pre-pandemic figures. 

The drop in sales was driven largely by rising mortgage rates, which reached over 6% in the wake of September’s mini-budget. Since then, buyer demand has decreased by 44%. 

At the same time, Zoopla reports, housing stock has been increasing. In the four weeks to 20 November 2022, 40% more properties were added to Zoopla than during the same period in 2021. 

With supply outstripping demand, 25% of the properties sold on Zoopla since 1 September 2022 have had their asking price lowered, with 11% having their asking price reduced by at least 5%. 

While house prices continue to rise in 2022 — albeit at a slowed rate — Zoopla expects them to decline in 2023, particularly in more expensive regions such as London and the South East.

Richard Donnell, executive director of research at Zoopla, said: “We still expect price falls of up to 5% in 2023, with one million sales and mortgage rates dipping below 5%. But the number of sales going through will remain buoyant.”

25 November: Mortgage Jitters Trigger Rental Market Surge

The numbers of people looking for properties to rent rather than buy are up sharply, according to new research.

Would-be property buyers appear to be putting their plans on ice amid uncertainty in the mortgage market, according to property website Rightmove.

Its data shows the number of people enquiring about rental properties is up 23% on the same period last year, despite broadly comparable numbers of house hunters overall.

Meanwhile, the number of smaller rental properties to let, including one-bed properties and studios, is down 4% on the same period last year, outstripping demand.

Rightmove rental expert Christian Balshen said: “It’s extremely frustrating for so many people in the rental market right now, with demand so high. Tenants are trying to secure viewings for properties as soon as they become available, and the stock shortage means agents are dealing with an unmanageable number of enquiries.

“The number of aspiring first-time buyers who have now had to turn to the rental market is exacerbating the situation further. We’re seeing some more properties coming to market, but nowhere enough to meet demand.”

A Rightmove survey of letting agents found they are managing 36 enquiries per property and spending an average of almost six hours on viewings per property. The website says this is the most competitive rental market on record, with quadruple the number of tenants as properties available.

Figures from spareroom.co.uk show the average monthly room rent was £626 in Q3 of 2022, up by 9% on the same period last year.

The average five-year fixed mortgage rate dropped below 6% this week, moving to 5.95% after having trended above this figure since 5 October – according to financial services data provider Moneyfacts.

17 November: First-Time Buyers Cut Spending To Fund Deposits – Rightmove

First-time buyers are cutting back on their spending, including using less gas and electricity, in order to save for a deposit, writes Candiece Cyrus.

Data from property portal Rightmove shows that 72% of first time buyers are also spending less on going out, while 49% are cutting expenditure on holidays and 35% are cancelling subscriptions for services such as Netflix and Amazon.

According to the survey, 16% say they will get financial help with their deposit from family or friends.

The release of Rightmove’s findings coincides with today’s Autumn Statement and follows yesterday’s inflation figures from the Office for National Statistics, which showed prices rising at 11.1% in the year to October.

Tim Bannister at Rightmove said: “The sudden nature of mortgage interest rate increases has meant that first time buyers have had to very quickly reassess their position. For example, those who already had a mortgage offer in place are trying to rush through their purchase to keep their lower rate. 

“Many of those who had not yet secured an offer and found that the monthly repayments they would pay on a mortgage were a lot more expensive than planned, either had to budget for the extra costs, look for a cheaper property and borrow less, or pause their plans altogether.

“Now that mortgage rates have started to settle down, first time buyers will be hoping that there are no surprises in today’s announcement, and they can begin to get some longer-term assurance and financial certainty after what has been a turbulent and very uncertain two months.”

Mr Bannister said many first time buyers are still determined to get onto the property ladder despite the significant challenges: “They are not being put off saving due to the current economic climate, and instead are making decisions in order to save as much as they can towards a deposit.”

16 November: ONS Average Price Levels Off From Record High

Average UK house prices remained flat at £295,000 in September, unchanged from a month earlier when they hit a record level, according to the latest figures from the Office for National Statistics (ONS), Andrew Michael writes.

House prices rose by 9.5% in the year to September this year, down sharply from the figure of 13.1% recorded in the 12 months to August.

The ONS said that the scale of the fall was because “average house prices were slightly inflated in September 2021, as buyers in England and Northern Ireland rushed to complete property purchases before Stamp Duty Land Tax changes at the end of that month”.

But other factors have also contributed, including eight successive interest rate rises since the end of 2021 and wider economic pressures applying the brakes to the momentum that has underpinned the UK  property market for the past two years.

House price growth was a mixed picture around the UK’s four nations. With a figure of 12.9%, Wales recorded the highest growth in the year to September, followed by Northern Ireland (10.7%), England (9.6%) and Scotland (7.3%).

Regional house price growth was greatest in the South West of England at 11.9% in the 12 months to September, followed by the East Midlands (11.3%), the East of England (10.4%) and the South East of England (10.3%).

Recording annual growth at 5.8%, the North East of England lagged other areas by a considerable margin.

Malcolm Webb, a director at Legal & General Surveying Services, said: “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.”

Natalie Hines, founder of Premier One Mortgages, said: “Over the past six weeks or so, there has been a definitive slowdown in purchase activity so we’re fully expecting a drop in prices during the year ahead. Sentiment has been hit hard by rising interest rates and people’s buying power is no longer what it used to be.”

14 November: Prices Fall As Sellers Brace For ‘Headwinds’ – Rightmove

The average price of a UK property coming to market this November fell by 1.1%, or £4,159, compared with the previous month, according to Rightmove, Andrew Michael writes.

Latest data from the property portal’s house price index showed that the average home is worth £366,999, a 7.2% rise on the year.

Against a backdrop of soaring inflation, rising interest rates and the toughest mortgage market for years, Rightmove said sales activity had slowed from the frenetic period experienced in 2021. The result has been that sellers are twice as likely to reduce asking prices to agree quicker sales than they were a year ago.

Earlier this month, the Bank of England raised interest rates to 3%, the eighth hike in less than a year, to their highest level since 2008. The move – coming in the middle of a severe cost-of-living crisis – piled extra financial pressure on the UK’s two million households with variable rate mortgages.

This week’s Autumn Statement is likely to ramp up the hardship on consumers further with the Chancellor of the Exchequer expected to tackle the UK’s £55 billion fiscal black hole by unveiling a combination of tax freezes and rises, plus a series of spending cuts.

Regionally, Rightmove said Wales suffered the largest month-on-month house price fall in November – down 3% on the previous month.

Over the 12 months to November, Yorkshire & Humber enjoyed the strongest annual price growth with a figure of 10.3%, nearly double that achieved in London (5.3%) which returned the weakest regional growth figure for the past year.

Tim Bannister, Rightmove’s director of property science, said: “What is certain is that the exceptional price growth of the last two years is unsustainable against the economic headwinds and growing affordability constraints.

“Homeowners who come to market in the final few months of the year tend to price lower to attract buyers in the lead-up to Christmas and we’re hearing from agents that both existing and new sellers understand that to sell in the current market they need to price competitively.”

Matthew Thompson, head of sales at estate agents Chestertons, said: “The November market to date has very much followed what we have been witnessing throughout the latter part of October. Buyers have been rushing to complete purchases in order to safeguard the fixed-rate mortgage rates they had already agreed with lenders.

“Many would-be sellers are waiting for more economic and political certainty before they put their properties up for sale, which will cause a shortage of new properties coming onto the market in the New Year.”

7 November: Annual Price Inflation Tumbles As First Time Buyers Struggle – Halifax

• Annual rate of growth down to 8.3% from 9.8%
• First time buyer properties down to 7.5% from 10.1%
• Average house prices fell by 0.4%
• Typical UK property now £292,598 – £293,664 last month

Figures out today from Halifax, the UK’s biggest mortgage lender, show a steep reduction in the annual rate of house price inflation in the 12 months to October, from 9.8% to 8.3%, writes Kevin Pratt.

Prices fell during the month by 0.4%, faster than the 0.1% decline recorded in September and the third fall in the past four months.

The price of a typical property edged down by over £1,000 to £292,598.

Halifax says property price inflation weakened across all buyer types during October, but was particularly notable for first-time buyer properties, where annual growth fell to 7.5% in October, having stood at 10.1% in September. 

The lender attributes this to demand being sapped by the challenges faced by first-time buyers with regard to raising big enough deposits.

Kim Kinnaird, Director, Halifax Mortgages, said: “Though the recent period of rapid house price inflation may now be at an end, it’s important to keep this is context, with average property prices rising more than £22,000 in the past 12 months, and by almost £60,000 over the last three years. 

“While a post-pandemic slowdown was expected, there’s no doubt the housing market received a significant shock as a result of the mini-budget in September which saw a sudden acceleration in mortgage rate increases. 

“While it is likely that those rates have peaked for now following the reversal of previously announced fiscal measures, it appears that recent events have encouraged those with existing mortgages to look at their options, and some would-be homebuyers to take a pause.”

Ms Kinnaird pointed to industry data that shows mortgage approvals and demand for borrowing declining. She says the rising cost of living coupled with stretched mortgage affordability is expected to continue to weigh on activity levels. 

She added: “With tax rises and spending cuts expected in the Autumn Statement [on 17 November], economic headwinds point to a much slower period for house prices. 

“While certain longer-term, structural market factors which support higher house prices – like the shortage of available properties for sale – are likely to remain, how significantly prices might ultimately adjust will also be determined by the performance of the labour market. 

“Currently joblessness remains historically low, but with growing expectations of the UK entering a recession, unemployment is expected to rise. While it may not spike to the same extent as seen in previous downturns, history tells us that how this picture develops in the coming months will be a key determinant of house price performance into next year and beyond.”

1 November: Nationwide Blames Market Turmoil For Steep Fall In Price Growth

House price growth in the year to October tumbled to 7.2% from the 9.5% increase logged by Nationwide building society in September, writes Kevin Pratt.

Month-on-month, prices fell by 0.9%. This is the first such fall since July last year, and the sharpest decline since June 2020. Nationwide says the average price of a property now stands at £268,282, down from £272,259.

Yesterday, property portal Zoopla reported a slight decrease in annual price growth, from 8.2% to 8.1% (see story below).

Robert Gardner at Nationwide says the market was hit by turmoil following the mini-Budget on 23 September, presided over by prime minister Liz Truss and her chancellor, Kwasi Kwarteng, both of whom have since left office.

Intended to stimulate growth across the economy, the unfunded tax-cutting measures were ill-received by money markets, leading to a steep rise in interest rates and intervention by the Bank of England to restore calm.

Mortgage lenders responded by withdrawing deals and raising rates, with fixed rate mortgages rising above the 6% mark for the first time since 2008 – the depths of the previous financial crisis.

Almost all the measures announced in September have been reversed by their respective replacements, Rishi Sunak and Jeremy Hunt, with markets generally responding positively.

Mr Garnder said: “Higher borrowing costs have added to stretched housing affordability at a time when household finances are already under pressure from high inflation.”

Nationwide figures show that the increase in mortgage rates meant a prospective first-time buyer earning an average wage and looking to buy with a 20% deposit would see their monthly mortgage payment rise from around a third of take-home pay to almost half, based on an average mortgage rate of 5.5%.

On Thursday this week, the Bank of England will announce the latest Bank rate, which determines interest rates generally. Currently standing at 2.25%, analysts believe it might increase to 2.75% or even 3%, adding further upward pressure to mortgage rates.

Mr Garnder says this will result in a further slowing in house price growth: “Inflation will remain high for some time yet and Bank rate is likely to rise further as the Bank of England seeks to ensure demand in the economy slows to relieve domestic price pressures.

“The outlook is extremely uncertain, and much will depend on how the broader economy performs, but a relatively soft landing is still possible. Longer term borrowing costs have fallen back in recent weeks and may moderate further if investor sentiment continues to recover.”

31 October: Zoopla Reports 8.1% Price Rise

Average UK property prices rose by 8.1% in the 12 months to September 2022 according to data from property portal Zoopla, writes Bethany Garner.

This represents  a slight decline on the annual growth rate recorded the previous month of 8.2%. Zoopla says a typical home now costs £259,100, compared with £258,100 in August. 

House prices in Nottingham rose more than anywhere else in the country, growing by 10.9% in the year to September, followed by Manchester (9.3%) and Brimingham (9.2%). Growth was slower in Scotland, with prices rising by 5.7% in the same period. In Aberdeen, prices fell by 0.9%. 

Zoopla’s analysis also revealed an uptick in the number of price reductions on individual properties, with almost 7% of homes for sale having seen their asking price reduced by at least 5%. 

Slowing price growth is likely linked to falling buyer demand, which is down by a third since last month’s mini-budget. 

In the South East of England, buyer demand dipped more sharply than the national average, declining by 40%, while demand in the West Midlands similarly fell by 38%.

Demand also fell in more affordable areas — by 20% in the North East of England, and by 24% in Scotland. 

Zoopla says the decline has likely been driven by surging mortgage rates, which rose to around 6% on some deals in September and early October.

However, there are signs that rates are coming down again, although not to previous levels.

Richard Donnell, executive director at Zoopla, said: “The most likely outcome for 2023 is that we see a fall in mortgage rates towards 4% with a modest decline in house prices of up to 5%.”

Despite lagging demand, the housing market is on track for around 1.3 million sales in 2022, Zoopla predicts.

Mr Donnell said: “The outlook for the year ahead hinges on the trajectory for mortgage rates, which impacts the buying power of households who are already facing higher living costs.

“House prices have risen significantly over the pandemic and homeowners wanting to sell in 2023 will need to be realistic on price and may have to forgo some of the pandemic price gains to achieve a sale.”

27 October: Prices Face 8% Fall in 2023 – Lloyds

House prices could fall by 8% next year before stagnating until 2027, according to experts at Lloyds Banking Group, writes Mark Hooson.

As part of its quarterly earnings report released today, 27 October, the UK’s largest mortgage lender forecast how it expects house prices to change over the next twelve months. 

It predicts prices will fall by 0.2% in the first quarter of 2023, then by 5.8% in the second quarter, 8.2% in the third quarter and 7.9 in the fourth quarter.

The banking group, which includes former building society Halifax, is setting aside £668 million to cover bad debts as rising interest and mortgage rates squeeze household finances – what it calls a “deterioration in the economic outlook”.

Though house price depreciation of 8% could put low-equity mortgage holders into negative equity, price increases over the last year could mitigate that risk. 

The average residential property in the UK rose in value by 13.6% to £296,000 in the year to August, according to Office for National Statistics (ONS) data.

Lloyds expects the Bank of England’s base rate, which directly impacts mortgage rates, to peak at 4% during the fourth quarter of this financial year, before falling in early 2024 once inflation is under control.

The mortgage market was thrown into turmoil this month when former Prime Minister Liz Truss’ mini-Budget set out an economic agenda that sent gilt yields up and the value of sterling down. 

The knock-on effect saw lenders increase mortgage rates and withdraw thousands of products, leaving many buyers and remortgaging owners in difficulty.

With Ms Truss and former chancellor Kwasi Kwarteng now replaced by Rishi Sunak and Jeremy Hunt as Prime Minister and Chancellor respectively, some believe fixed rate mortgage rates may have now peaked, but it’s unclear when rates might begin to fall.

Lloyds made an after-tax profit of £1.2 billion in the third quarter of 2022, down from £1.6 billion in the same quarter last year.

Profits for the year to date stand at £4 billion after tax, down from £5.4 billion after tax for the first nine months of 2021.

24 October: Demand For City Properties Pushes Up Prices – Halifax

• Major cities see 9.2% price increase since January
• Workers returning to offices post pandemic
• Buyers choosing city amenities over space

Increased demand for properties in urban locations since the start of the year has been the main factor behind house price inflation in 2022, according to Halifax, the UK’s biggest mortgage lender.

House prices in major cities have soared by around 9.2% up to September this year, according to the latest Halifax data. This compares to a 7.9% increase in the suburbs, writes Candiece Cyrus.

While house prices in and around individual cities still vary significantly, overall the data reflects a post-pandemic shift in buyers’ preferences. The previous couple of years saw buyers, many of whom worked from home due to the pandemic, seek properties with more space. This drove property prices up in suburban and rural areas. 

As more buyers return to offices post pandemic, they’re increasingly opting for urban centres. 

Andrew Asaam, mortgages director at Halifax, said: “The pandemic transformed the UK housing market. Homeowners wanted bigger homes and better access to green spaces, fueling huge demand for larger properties away from urban centres. This accelerated house price growth in the suburbs and more rural areas, while in cities it was much slower.

“That trend didn’t disappear completely this year, as house price growth in these areas remained strong. But, as daily life started to get back to normal for many, the opportunity to live in cities became more attractive again, driving up demand. There’s evidence of this in locations across the country, with property price inflation in the majority of cities outstripping increases in their surrounding areas.”

Cities such as Liverpool (8.9%) and Manchester (11.5%) have seen strong price growth so far this year, with the average house price reaching £172,636 and £228,806 respectively. This compares to growth of 7.2% and 6.6% in the respective surrounding areas. In Bury, near Manchester, house prices have risen as little as 1.3%.

In Scotland, Edinburgh has seen house price inflation of 12.9% since January, with the average house price reaching £276,831 in September. House prices in Glasgow have risen by 8.5% to an average of £173,331. This compares to property price growth of  6.1% and 4.6% in their respective surrounding areas. 

Fife, near Edinburgh, and West Dunbartonshire, near Glasgow, saw the lowest price growth in the surrounding areas (2.1% and -0.7% respectively).

Inner London boroughs have seen price growth of 6.8% since the start of this year, while outer borough prices have risen only by 4.6%. Brent is one of several London boroughs where prices have fallen so far this year (-8.4%).

In contrast to the main findings of the report, cities in the north east are seeing less price growth than their surrounding areas. Prices rose by 6.4% to £182,163 in Newcastle, and fell by 2.2% to £143,369 in Middleborough.

In the West Midlands, prices in the areas surrounding Birmingham have risen by 9.4% since January compared to 8.6% in the city, to £223,362. The neighbouring town of Walsall experienced property price inflation of 16.4% during this period.

Mr Asaam said current trends in buyer behaviour are likely to modify in response to economic conditions: “Clearly the economic environment has changed considerably in the last few months, with the likelihood of more significant downward pressure on house prices, as the cost of living squeeze and higher borrowing costs limit demand. The extent to which such trends will continue to shape the housing market is therefore uncertain.”

21 October: Rightmove Sees Rents Reach Record High 

• Average monthly rent hits record high
• Rents up 3.2% this quarter across UK
• Record annual growth in London

Renters outside London paid an unprecedented average of £1,162 per calendar month (pcm) to rent their home in the third quarter of this year, reveals the latest data from property portal Rightmove, writes Candiece Cyrus.

This is 3.2% more than what they paid on average in the previous quarter of this year and marks only the third time on record that rents have ever soared by 3% or more in a quarter, 

The data, which analysed 357,061 rent charges also found Londoners faced the fastest annual growth recorded of any region, paying out 16.1% more year-on-year –  the highest rate of annual growth yet seen by Rightmove – to the tune of £2,343 pcm. This compares to annual growth of 11% for renters outside of the capital.

The pace of growth across the UK can be attributed to a 20% rise in demand for  rented accommodation coupled with a fall of almost 10% (9%) in available properties, says Rightmove. London has seen a 24% fall in the  number of properties on the rental market compared to last year. The gap between supply and demand has also meant more renters are competing for each opportunity.

However, Rightmove says it is not all doom and gloom for renters, as many areas are seeing an increased number of properties becoming available to rent compared to last year. This includes the South West (+19%), Yorkshire & The Humber (+12%) and Wales (+10%).

Tim Bannister, director of property science at Rightmove, said: “It’s a real challenge for renters at the moment, as there are simply not enough homes available to rent to meet the demand from people enquiring. 

“While  it’s positive news that most areas are seeing more properties coming to market, with London the notable exception, ultimately the gap between supply and demand is becoming wider across the board. We will need a significant addition of homes to come onto the market to even begin to balance the scales.”

Higher mortgage interest rates are likely to have a knock-on effect on the rental market too as those who previously planned to purchase their first home are forced to rent instead. A first-time buyer with a 10% deposit is now paying £1,121 pcm to buy, while a renter pays 20% less (£932 pcm) to rent the equivalent property. 

With stretched budgets and a preference for living in city centres, the demand for typically cheaper studio flats has grown by 71% compared to last year, says Rightmove.

19 October: ONS Average Price Hits Record Figure But Growth Slows

Average UK house prices hit a record £296,000 in August 2022, £36,000 higher than the same month a year earlier, according to figures from the Office for National Statistics (ONS).

The ONS said house prices grew by 13.6% over the year to August, down from a peak of 16% a month earlier.

Despite prices registering a 1.1% month-on-month increase between July and August, the annual growth figure has slowed because the sharp rise in prices in August 2021 – triggered by changes to the stamp duty holiday in England and Northern Ireland – has fallen out of the calculation.

House price growth was a mixed picture around the four UK nations. With a figure of 14.6%, Wales recorded the highest growth in the year to August, followed by England (14.3%), Scotland (9.7%) and Northern Ireland (9.6%).

Regional house price growth was greatest in the South West of England at 17% in the year to August, followed by the East Midlands (16.9%).

At 8.3%, London lagged other parts of England by a considerable margin. Despite recording the lowest growth, with a figure of £553,000 average house prices in the capital remain the most expensive anywhere in the UK.

Andy Sommerville, director at data provider Search Acumen, said: “Homebuyers are no more fans of uncertainty than stock market traders, and today’s 1.1% rise in house prices for August may be the last we see for some time as consumer confidence hits the breaks.”

Aaron Forster, director of mortgage broker Create Finance, said: “With mortgage rates soaring and inflation back into double digits, house prices will now come under real pressure. 

“The market generally slows down in the closing stages of the year anyway, as people’s attention switches to Christmas. But this year that could happen earlier than usual due to the sheer uncertainty about both the UK’s economic picture and its interest rates landscape.”

17 October: Rightmove – Asking Prices Up But Growth Set To Slow

• Average October asking prices climb by 0.9%
• Property coming to market costs record £371,158
• Annual rate of growth slows to 7.8% 

The average price of property coming to market in October has increased by 0.9% on the previous month, according to Rightmove, writes Laura Howard.

The portal’s latest property index puts average asking prices across the UK at £371,158, a record high.

But October’s figure – which Rightmove says is underpinned by a shortage of property for sale – may not reflect the full impact of rapidly-rising interest rates or recent economic turmoil.

The annual rate of growth for October at 7.8% has slowed from the 8.7% reported in September, while the latest 0.9% monthly rise is less than Rightmove’s five-year average for October at 1.2%.

While 20% up compared to pre-pandemic 2019, buyer demand in the last two weeks was also down, said Rightmove – by 15% compared with the same period last year.

October saw a small (2%) rise in the number of homes that have been reduced in price, now accounting for a total of 23% listed on the portal. However, the five-year pre-pandemic average is 32%.

Tim Bannister, director of property science at Rightmove, said: “There has been no immediate effect on prices, but the trend of a slight softening in the pace of growth continues. 

“It will take a bit of time for the market to settle into a new, more ‘normal’ level of activity following over two years of market frenzy, especially with new developments happening almost daily at the moment.”

His comments come on the day that the new Chancellor of the Exchequer, Jeremy Hunt, will reveal details of his approach to the management of the economy.

Rightmove said it was ‘very likely’ that asking prices will fall in November and December as they usually do – but it will be important to distinguish between a regular seasonal slowdown and wider factors.

Effect on buyers 

Continued interest rate rises have prompted some homemovers to pause their plans but those with mortgage deals agreed have rushed to complete before their offer expires and they face higher rates.

Only 3.1% of sales agreed have fallen through in the two weeks following the government’s catastrophic so-called mini-Budget on 23 September – broadly in line with the 3% during the same two weeks in 2019.

However, the impact of rising interest rates has already hit first-time buyers, with demand in the sector down by 21% in the last two weeks compared to the same two weeks last year. 

The average first-time buyer home cost £224,713 in October, which is 6.7% more expensive than this time last year.

Mr Bannister said: “Some aspiring first-time buyers will have had their plans dashed by the sudden nature of the mortgage rate rises, and now face a difficult situation with rents also rising, and a shortage of available homes to rent.” 

Four of the UK’s 11 regions – the North East, North West, East Midlands and East of England – saw marginal falls in asking prices in October compared to the month before, while the South West posted no change. 

Having lagged behind in recent years, the biggest monthly rise at 1.9% was in London where average asking prices stand at £695,642. 

However, taking an average of 51 days, the capital is the slowest region in which to sell a property. Sales are quickest in the West Midlands where it takes an average of 34 days.

7 October: Prices Down Three Months Running – Halifax

• Annual house price inflation tumbles to 9.9%
• Down from 12.5% high in June
• Prices down 0.1% month on month
• Average property price £293,835 

Annual house price growth fell in September for the third month in succession, tumbling to 9.9% from 11.4% recorded in August, according to Halifax, the UK’s biggest mortgage lender, writes Kevin Pratt.

This is the first time since January that the figure has been in single figures. The rate peaked in June at 12.5%.

The price of a typical property nudged back -0.1% to £293,835 from Halifax’s record high average of £293,992 in August. 

The figures, released today, do not fully reflect the recent seismic events across the political and economic spectrum, with mortgage rates surging in the wake of the government’s badly-received mini-Budget on 23 September.

Commentators believe demand will be sapped by the rising cost of borrowing, further weakening the momentum behind house price growth. The three-month decline in annual house price inflation suggests buyers were already spooked by seven rises in the Bank of England Bank rate since December 2021.

The Bank will reveal its latest decision on the Bank rate, which largely determines the cost of mortgage borrowing, on 3 November. It currently stands at 2.25%, with some economists expecting another rise to 2.5% or 2.75%.

The average interest rates for two and five-year fixed rate mortgages this week topped 6% for the first time in over a decade, crushing the plans of many would-be homebuyers and adding further pressure on mortgage borrowers needing to remortgage from existing loans.

Kim Kinnaird, a director at Halifax, said: “The events of the last few weeks have led to greater economic uncertainty, but 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. 

“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 [announced in the mini-Budget], 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.”

Wales remains at the top of the table for annual house price inflation, with a rate of 14.8%, down from 15.8% in August, and an average property cost of £224,490.

The slowest rate of annual growth in the UK continues to be reported in London, with house prices rising by 8.1% over the last year. But this needs to be set against the fact that a typical home in the capital costs £553,849, the highest price in the country. 

September 30: House Price Inflation Slows To Single Figures – Nationwide 

• Annual house price growth dips to 9.5% in September
• Monthly growth static as new buyer enquiries decline 
• Typical UK home now costs £272,259

The annual rate at which property prices are rising fell to 9.5% in September, down from 10% recorded in August, according to the latest house price report from Nationwide.

The UK’s largest building society said that the cost of an average home in the UK is now £272,259.

On a monthly basis, house price inflation was flat between August and September this year, factoring in seasonal effects. This is the first time, since July 2021, that house prices had failed to rise month-on-month.

Robert Gardner, chief economist at Nationwide, said: “There have been further signs of a slowdown in the market over the past month, with the number of mortgages approved for house purchase remaining below pre-pandemic levels and surveyors reporting a decline in new buyer enquiries.  

“Nevertheless, the slowdown to date has been modest and, combined with a shortage of stock on the market, this has meant that price growth has remained firm.”

Nationwide said that factors such as the UK experiencing the lowest unemployment rate since the 1970s, plus the Government’s recent Stamp Duty cut – which saves buyers up to £2,500 – are expected to support housing market activity and prices going forward.  

But it warned that these are likely to be offset by strengthening “headwinds” such as continued high inflation and the cost-of-living crisis, with consumer confidence at all-time lows. 

Seven consecutive interest rate rises from the Bank of England since last year have increasingly pushed up the cost of mortgages. Lenders have also withdrawn thousands of home loan deals in the fall out of the Government’s recent mini-budget.

Housing affordability is also becoming more stretched. Mr Gardner said: “Deposit requirements remain a major barrier, with a 10% deposit on a typical first-time buyer property equivalent to almost 60% of annual gross earnings – an all-time high.

“Moreover, the significant increase in prices in recent years, together with the significant increase in mortgage rates since the start of the year, have pushed the typical mortgage payment as a share of take-home pay well above the long-run average.”

Nicky Stevenson, managing director at national estate agent group Fine & Country, warned that Nationwide’s latest house price report is unlikely to show the full picture.

She said: “We know that a week is a long time in politics and perhaps the same could be said for the housing market. This data relates mainly to the period in September which came before last week’s mini-budget, and shows only a very modest slowdown in annual house price growth.

“In the coming weeks and months it is likely we will see a different picture emerging as interest rates accelerate faster than anyone anticipated against a backdrop of a sinking pound. 

“Increased borrowing costs may well have the effect of wiping-out any cash savings that buyers hoped to make as a result of the stamp duty cut, while volatility in the mortgage market could delay transactions already in the pipeline.”

The regions 

Nationwide also reports prices on a regional level every quarter. In Q3 covering July to September this year, it revealed that 10 of the 13 regions had seen a softening in annual growth, with only London, and both the West and East Midlands reporting an annual rise in quarter-on-quarter. 

Prices were strongest in the South West which saw annual growth of 12.5%, albeit down from the 14.7% recorded in Q2, while Wales was the strongest-performing nation with average prices 12.1% higher than a year ago. Despite climbing from Q2, London continued to be the weakest-performing region posting annual inflation of 6.7%. 

29 September: Zoopla Warns Soaring Rates Will Hit Affordability

Average UK property values rose by 8.2% in the 12 months to August 2022, a slight decline on the annual growth rate recorded the previous month, according to house price data from Zoopla, Andrew Michael writes.

The property portal says a typical UK home now costs £258,100 compared with £256,900 in July.

It adds that, while activity in the housing market held up over the summer, the recent spike in mortgage rates for new borrowers will be the most important factor for the property sector in the autumn.

Last week, in a move aimed at heading off soaring inflation levels, the Bank of England (BoE) hiked the Bank rate to 2.25%, the seventh consecutive rise since December 2021.

A day later, the mini-Budget outlined the government’s proposals for a large package of tax cuts to be paid for out of a new round of borrowing, prompting lenders to remove hundreds of mortgage products because of fears of further steep rate rises.

According to some forecasts, mortgage interest rates could reach 6% by early 2023.

Zoopla says that, if interest rates on mortgages reached 5% by the end of this year, a homebuyer’s potential purchasing power would be reduced by as much as 28%, assuming that a buyer wanted to keep his or her monthly home loan repayments unchanged.

To offset such a hit to buying power, Zoopla said buyers had three options: to put down a large deposit, allocate more of their income to mortgage costs, or adjust their budgets and consider either buying a smaller property or focusing on a cheaper area.

Regionally, Wales recorded the strongest annual house price growth to August this year with a figure of 11%. This was followed by the South West of England and the East Midlands at 10.3% and 10% respectively.

As part of last week’s mini-budget, Kwasi Kwarteng, the Chancellor of the Exchequer, announced an extension from £125,000 to £250,000 for the Stamp Duty nil-rate band as applied to properties in England and Northern Ireland.

First-time buyers in England and Northern Ireland were also exempted from Stamp Duty on properties worth up to £425,000, a rise of £125,000 from the previous level.

In a separate announcement, the starting threshold for paying Land Transaction Tax in Wales, the equivalent of Stamp Duty, is being increased from £180,000 to £225,000 from 10 October.

Richard Donnell, executive director at Zoopla, said: “Measures of housing market activity have been very resilient over the summer. A surge in home values over the pandemic and the rise of mortgage rates means we face a sizeable hit to household buying power over the rest of 2022 and into 2023.

“While the recent changes to Stamp Duty are welcome, supporting activity in regional markets and the first-time buyer market in southern England, the increase in mortgage rates will erode much of the gains. Homeowners that want to sell their home this year need to price realistically and seek the advice of an agent on local market trends.”

Matthew Thompson, head of sales at London-based estate agents Chestertons, said: “As interest rates are increasing and lenders are adjusting their affordability calculations, buyers who have not yet found a property may be facing a change in what they can afford. 

“As a result, many house hunters will be required to review their initial budget, with rising utility costs another important factor to take into account.”

27 September: Welsh Government Confirms Rise To Property Tax Starting Threshold

The starting threshold for paying Land Transaction Tax in Wales, the equivalent to Stamp Duty, is being increased from £180,000 to £225,000 from 10 October.

From the same date there will be an increase in the rate payable on the purchase of homes costing £345,000 or more.

The move is intended to ensure that the threshold for paying tax reflects the rise in property prices over the last two years, according to the Welsh Government. It will mean an estimated 61% of homebuyers will not pay tax on their purchase from 10 October.

The move follows the rise in the nil-rate band at which Stamp Duty is payable in England and Northern Ireland from £125,000 to £250,000, announced in last Friday’s mini-Budget.

Rebecca Evans, Minister for Finance and Local Government, said: “This is a change tailored to the unique needs of the housing market in Wales and contributes to our wider vision of a fairer tax system. The changes will give support to people who need it and help with the impact of rising interest rates.”

The Welsh Government was considering making changes at its Budget later this year, but is bringing the changes forward to ‘give clarity’ to the housing market, she added.

Rightmove: Price Rises Typical For September – While Demand Is Up

The average price of property coming to the market increased by 0.7% in September (£2,587) to £367,760. The rise is in line with the 0.6% average asking price increase among new sellers for September over the last 10 years, according to Rightmove. On an annual basis, average asking prices are 8.7% higher this month than a year ago.

The mid- and high-end sectors of the property market are responsible for the rise, said the property portal, which recorded a new ‘second stepper’ average record asking price of £340,513. These homes are defined as either three bedrooms or non-detached with four bedrooms.

The figures show that the market remains ‘surprisingly resilient’ despite growing economic pressures, said Rightmove – with buyer demand up 20% on the pre-Covid five-year average. The number of homes coming to the market rose by 16% in September compared to this time last year marking a return to 2019 levels.

The cut in Stamp Duty announced in Friday’s Mini Budget – which raised the nil-rate band on the purchase of a property from £125,000 to £250,000 – should stimulate more demand over the next few months, with a third (33%) of all homes listed on Rightmove now exempt from the tax.

First-time buyers

First-time buyers are facing a double-whammy of rising property prices and rising mortgage costs. Average monthly mortgage payments for new first-timers currently stand at £1,057 which accounts for 40% of an average gross salary, said Rightmove. And this monthly cost will jump to £1,114 if mortgage lenders pass on the recent 0.5 percentage point rise in interest rates (to their current 2.25%).

A 10% deposit on a typical first-time buyer home is now 57% higher than 10 years ago, while average salaries have increased by just 32% over the same time, making it increasingly difficult to save the required deposit.

However, two-thirds of homes (66%) of homes are now Stamp Duty-exempt for first-time buyers in England, said Rightmove as the recent reforms mean that first-time buyers will be exempt from the first £425,000 on homes costing up to £625,000. This compares to the previous first £300,000 exemption on homes costing up to £500,000.

Tim Bannister, director of property science at Rightmove, said: “The end of the summer break and the start of the new school term is usually a time when we see renewed focus from buyers, as those with plans to move see an autumn window of opportunity ahead of them.

“Prices are likely to remain strong while demand continues to outweigh supply. However, it is as important as ever to price competitively, especially in the sectors where there is now more choice – as there is a fine line between a realistically priced home and a home that feels overpriced when many buyers are making every pound count.”

21 September 2022: Stamp Duty Receipts Up 29% On Last Year  – HMRC

Property buyers paid a collective £8.9 billion in Stamp Duty Land Tax (SDLT) between April and August, according to the latest data from HM Revenue & Customs.

The receipts were more than 29% higher than the £6.9 billion collected the same period in 2021, when buyers benefitted from a temporary SDLT holiday on properties worth up to £500,000.

Figures from the Office for National Statistics (ONS) published last week marked the largest spike in annual house prices in almost 20 years, with average house prices increasing by 15.5% over the 12 months to July.

The latest statistics come amid rumours of a fresh SDLT holiday, expected to be announced by chancellor Kwasi Kwarteng this Friday (23 September) in a mini-Budget.

Helen Morrissey of investment platform Hargreaves Lansdown said: “Stamp duty receipts continue to surge, topping a whopping £8.9bn between April and August this year. 

“This is not only a sign of a housing market in rude health but also down to the lingering after-effects of the stamp duty holiday, which ended in September last year. 

“Whether we continue to see such steep increases in stamp duty over the coming months remains to be seen as the effects of this holiday are stripped out of the figures and soaring interest rates and cost of living crunch put a dampener on our plans to buy that dream home.”

14 September: Biggest Spike In Annual House Prices Since 2003 Due To End Of Stamp Duty Holiday – ONS

Average house prices increased by 15.5% over the 12 months to July, figures out today from the Office for National Statistics (ONS) show. 

The annual inflation rate is double the 7.8% recorded in the year to June, and marks the steepest annual rise since May 2003.

The latest data from the ONS puts the average cost of a UK home at £292,000 in July – £6,000 higher than June, and a staggering £39,000 more than in July last year.

The reason behind the stark rise – which does not reflect the more general slowing in annual inflation reported by other house price indices – is due to the effects of the expiring stamp duty holiday, which had been implemented by the government a year earlier in a bid to jumpstart the property market after Covid.

Between July 2020 and 30 June 2021 purchasers of property up to £500,000 in England and Northern Ireland paid no tax at all. The ‘nil rate band’ then tapered down to £250,000, returning back to its standard £125,000 from the start of October 2021.

In Scotland and Wales the nil-rate band on equivalent property taxes was set at £250,000 and ended on 31 March 2021 and 30 June 2021 respectively.

As buyers ‘rushed to complete’ on their purchase before the end of the tax-free terms, sellers may have been able to ‘request higher prices’ as the buyers’ overall costs were reduced, according to the ONS.

Across the regions 

At 16.4%, average house prices increased most in England in the year to July to a new high of £312,000. 

In Wales prices were 17.6% higher, standing at an average of £220,000. 

In Scotland, prices rose by 9.9% to £193,000 while in Northern Ireland prices increased by 9.6% to £169,000.

Myron Jobson, senior personal finance analyst, at interactive investor, says: “The huge jump in house prices in July shows the extent in which the stamp duty holiday turbocharged the housing market after virtually grinding to a halt during the pandemic. But it doesn’t tell us where prices are heading.”

Jeremy Leaf, estate agent and former residential chairman of the Royal Institute of Chartered Surveyors (RICS) said that, “it was a little early even for this, the most comprehensive of all the housing market surveys, to reflect the change in activity we’ve seen on the ground in the past few months.” 

He added, “A gentle softening has been happening and is likely to continue to do so over the next few months.”

ONS figures refer to completed sales rather than advertised or approved prices from mortgage lenders, so can be up to three months old.

7 September: Slowdown For Annual House Prices – But Growth Still Firmly In Double Digits

• 11.5% annual house price growth in August, down from 11.8%
• Prices up by 0.4% month-on-month 
• Typical UK property now costs a record £294,260

The average UK property climbed in price by 0.4% in August, reversing the previous month’s downward trend, according to the latest data from Halifax.

The lender said the cost of a typical UK home now stands at a new record high of £294,260.

Halifax said the overall pace at which house prices are rising is easing, with the lender recording annual growth of 11.5% last month compared to 11.8% in July. August’s figure is the lowest level of annual growth reported in the last three months.

August’s price rise was described as “relatively modest” by the lender compared to the average figure of 0.9% recorded over the past year.

Kim Kinnaird, director at Halifax Mortgages said that industry surveys point towards cooling expectations across most regions in the UK, as buyer demand eases and other “forward-looking indicators” suggest a likely slowdown in market activity.

“Firstly there is the considerable hit to people’s incomes from the cost-of-living squeeze,” said Ms Kinnaird. “The 80% rise in the energy price cap for October will put more pressure on household finances, as will the further increases expected for January and April.

“At the levels being predicted, this is likely to constrain the amounts that prospective homebuyers can afford to borrow, on top of the adverse impact of higher energy prices on the wider economy.

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

Performance in the regions

Regionally, Wales posted the strongest annual house price growth with a figure of 16.1%. The average price of a property in Wales was £224,858 in August.

The South West of England also continues to record a strong rate of annual growth, up by 14.5%, with an average property in the region now costing £313,003.

In Northern Ireland annual growth rates eased back further in August to 12.5%, with a typical home now costing £185,505, while Scotland also saw another slowdown in the rate of annual house price inflation to 9.4% from 9.5% in July. A Scottish home is now valued at an average of £204,362.

There are further signs of a bounce back in London, with the rate of annual house price inflation rising to 8.8% in August, marking its highest level in more than six years. A typical property in the capital now costs £554,718 having risen by £44,669 over the last 12 months.

Average house prices in the UK as whole have increased by more than £30,000 over the last year, said Halifax.

1 September: Nationwide Reports Drop In House Price Inflation

• 10% annual house price growth in August, down from 11.0%
• Prices up 0.8% month-on-month
• Average price up almost £50,000 in two years

The average price of a UK property stands at £273,751, according to the latest survey from Nationwide building society. This is up from £271,209 in July and represents an increase of £49,628 in the past two years.

While the annual rate of house price inflation eased from 11% in July to 10% in August, this was the 10th successive month of double-digit growth.

Robert Gardner, Nationwide’s chief economist, said: “There are signs the housing market is losing some momentum, with surveyors reporting fewer new buyer enquiries in recent months and the number of mortgage approvals for house purchases falling below pre-pandemic levels. 

“However, the slowdown to date has been modest, and combined with a shortage of stock on the market, has meant that price growth has remained firm.

“We expect the market to slow further as pressure on household budgets intensifies in the coming quarters, with (general) inflation set to remain in double digits into next year.”

Mr Gardner said that, with the Bank of England widely expected to continue raising interest rates, there will be an added “cooling impact” on the market if this feeds through to mortgage rates, which have already increased in recent months on the back of previous Bank rate rises.

According to Nationwide, around 85% of mortgages are fixed rate deals, meaning borrowers are shielded from rate increases in the short term. Popular fixes last for two or five years.

However, it says that those who are looking to refinance their mortgage, either because their deal has come to an end or they are moving house, face a significant rise in borrowing costs if mortgage rates stay at current levels or increase further. 

Mr Gardner said: “The average rate on new two-year fixed rate mortgages is currently over two percentage points higher than those prevailing two years ago, while the average rate on five-year fixed rate mortgages is around 1.5 percentage points higher than five years ago.”

Higher mortgage repayments are likely to act as a brake on house price growth, especially given the increased pressure on household budgets because of rising energy costs and inflation across all areas of spending.

Lawrence Bowles at estate agent Savills, said: “As the year progresses, we expect to see rising mortgage rates and energy bills to temper the rate of house price growth. We’ve predicted average house prices will rise by 7.5% over the course of 2022 as a whole.

“Given how crucial rising energy bills are becoming in households’ finances, we expect to see values widen slightly between different property types, with prices for well-insulated, highly energy efficient properties likely to perform best over the coming months.”

26 August: Zoopla Warns Of Worsening Market Conditions For First-Time Buyers

• Average UK house price £256,900
• Year-on-year growth 8.3%
• South West of England and Wales see highest annual growth

The price of an average UK property rose by 8.3% in the 12 months to July 2022, according to the latest house price index from Zoopla, writes Andrew Michael.

The property portal said a typical UK home now costs £256,900, an increase of £19,800 over the past year.

Zoopla added that, while demand this year has remained above a five-year average, the situation had started to weaken during summer.

The company warned that the current climate of rising interest rates was making mortgages dearer and that this would affect property market activity in the second half of 2022, especially for first-time buyers and buyers in southern England.

Zoopla estimated that the average first-time buyer will need an additional £12,250 of income to buy a home compared with a year ago. Those looking to purchase in London would require an extra £35,000.

Regionally, the South West of England and Wales saw the joint strongest annual house price growth at a rate of 10.6% in the year to July this year.

Zoopla said that demand for homes in London continues to lag the rest of the UK due to pandemic and affordability-related factors. The capital registered annual price inflation of 4.1% to July, less than half the UK average.

Richard Donnell, director of research at Zoopla, said: “The housing market has been resilient to the rising cost of living so far. The new energy price cap will add to the pressure facing households, especially those on lower incomes.

“We see the recent jump in mortgage rates having a greater impact on housing activity and prices moving ahead.”

Ben Bailey, chief customer officer of specialist first-time buyer lender Even, said: “Rising house prices come as another hammer blow to the aspirations of prospective first-time buyers. Those who now have to navigate the escalating cost of living and rocketing rents – and can’t fall back on the Bank of Mum and Dad – may be forgiven for thinking they’ve missed the homeownership boat.”

17 August: Steep Fall In Property Inflation Rate But Average Price Still £20,000 Up On June 2021

• UK average house prices increased by 7.8% in year to June 2022, down from 12.8% in May
• Annual house price inflation slows due to rises in June 2021 resulting from tax break changes
• Average UK house price £286,000 in June 2022, £20,000 higher than this time last year

Figures out today from the Office of National Statistics (ONS) show a steep decline in house price inflation in the year to June. The rate of price increase is still chunky, at 7.8%, but this compares to 12.8% recorded for the year to May 2022.

The ONS says the price of an average UK house rose by £20,000 over the year to reach £286,000. The figure for May was £283,000.

Average house prices increased over the year in England to £305,000 (7.3%), in Wales to £213,000 (8.6%), in Scotland to £192,000 (11.6%) and in Northern Ireland to £169,000 (9.6%)

The ONS believes says levels of inflation last year can be attributed to increased demand for property during the property tax holidays introduced across the UK to stimulate the market during the worst of the coronavirus lockdowns: “These changes in the tax paid on housing transactions may have allowed sellers to request higher prices as the buyers’ overall costs were reduced.”

The steep 5 percentage point drop in the June 2022 rate is said to by ONS to reflect “the volatility in house prices throughout 2021, and in particular the inflated prices that were seen in June 2021 as a result of the tax break changes.”

There were an estimated 95,420 residential transactions in the UK in June 2022. This is 54.3% lower than June 2021 and 7.9% lower than May 2022.

16 August: Landlords Make Would-Be Tenants Fight ‘Bidding Wars’

Renters are reporting ‘bidding wars’ for private properties, with landlords exploiting high levels of demand to force would-be tenants to pay well above the initial asking price. 

Private rental properties are typically let on a first-come first-served basis, but with demand outstripping supply, some renters say they are being pressured to bid against each other to secure a home.

Many renters have taken to social media to voice their bidding war experiences. One Twitter user shared that an acquaintance hoping to rent a flat in Brixton was expected to bid against 29 other viewers. Another said a flat first advertised at £1,800 per month was rented for £2,150 per month after a bidding process. 

Others said they had also paid six months’ rent or more in advance to secure a property. 

This intense competition is largely fuelled by a drop in the number of available rental properties.

According to Propertymark research, the number of rental properties listed through letting agencies dropped by 49% between March 2019 and March 2022. In July, Rightmove also reported a 26% year-on-year decrease in the number of rental listings. 

Adam Kingswood, Propertymark regions executive, commented: “Two years ago, I could count on one hand the number of times a tenant would offer above the asking price for rent. Now people regularly offer three or even six months’ rent in advance or an extra £50 a month above the asking price.”

Nathan Emerson, Propertymark CEO, said: “The number of properties available to rent has been diminishing with a large portion of landlords choosing to sell their properties.

“We know from our qualitative research that the most common reasons for landlords to choose to sell their properties and no longer provide homes are around risk, finances and viability.”

Mr Emerson believes regulatory changes are a key factor motivating landlords to sell their properties. The Renters Reform Bill, due to be enacted by the end of the year, will end no-fault evictions and require landlords to meet a new ‘decent homes standard’. 

By 2025, landlords may also be banned from renting out homes with an Energy Performance Certificate (EPC) rating lower than C. 

15 August: Rightmove Reports First Monthly Price Fall Of 2022

• UK house prices dip for first time this year
• Average property worth £365,173
• Annual growth strongest in East Midlands

Average UK house prices fell in August 2022, their first drop this year, according to the latest market data from Rightmove.

The property portal’s latest house price index showed that property values dropped by 1.3% month-on-month since July – equivalent to a fall of £4,795. It puts the new value of an average UK home at £365,173.

Rightmove also reported an easing in the annual rate of house price growth to 8.2% in August, down from 9.3% the previous month.

Earlier this August, property data from Halifax, one of the UK’s largest mortgage lenders, also recorded a recent fall in average UK house prices.

Rightmove said it was common for house prices to fall during the month of August and that the latest drop was “on a par with the average of 1.3% over the last 10 years”.

The company added that some of the more ‘urgent sellers’ who are coming to market are pricing competitively to attract suitable buyers more quickly in a bid to beat the average time of 136 days to complete a sale and move before Christmas.

But Rightmove also acknowledged that several factors point to activity in the market continuing to cool and that the impact of interest rate rises would filter through to the market over the remainder of 2022.

The Bank of England recently raised interest rates to 1.75%, marking the sixth hike since December last year, and predicted that UK inflation would jump from its present level of 9.4% to around 13% by the end of 2022.

The latest UK inflation figure is due on Wednesday of this week, with the next interest rate announcement due on 15 September.

Against a backdrop of economic uncertainty, Rightmove forecasts that average house price growth will stand at around 7% by the end of this year.  

At a regional level the East Midlands, with a figure of 11.6%, recorded the strongest annual price growth to August. Next came the West Midlands followed by the South West, up 11.4% and 11%, respectively.

Tim Bannister, Rightmove’s director of property science, said a drop in asking prices was to be expected in August as the market returned to more normal seasonal patterns after a couple of “frenzied years” following the Covid pandemic. 

He said: “Right now, the data shows that interest rate rises are not having a significant impact on the number of people wanting to move.

“Demand has eased a degree and there is now more choice for buyers, but the two remain at odds and the size of this imbalance will prevent major price falls this year.” 

5 August: Halifax Reports First House Price Fall In Over A Year

• UK house prices suffer their first drop in a year
• Average property worth £293,221
• Annual growth strongest in Wales at 14.7%

Average UK house prices fell in July 2022, their first drop in over a year, according to the latest property market data from Halifax, part of the Lloyds banking group, writes Andrew Michael.

The lender’s latest house price index showed that price growth declined by 0.1%, or £365, month-on-month since June, valuing an average UK home at £293,221.

Halifax also reported an easing in the annual rate of house price growth to 11.8%, down from 12.5% last month.

Earlier this week, separate house price data from both the Nationwide building society and Zoopla also indicated a slight relaxation in the strength of the UK’s property market.

Halifax acknowledged that leading indicators of the housing market have recently shown a softening of activity and that rising borrowing costs are adding to the squeeze on household budgets.

Yesterday, in a bid to stave off steepling inflation, the Bank of England raised interest rates for the sixth time in seven months to 1.75%, their highest level in 27 years. It also warned of double-digit inflation levels for the UK by the year end and that a recession was likely.

Halifax said that price gains for larger properties are noticeably outpacing those for lower homes. The price of a detached house has jumped by 15.1%, the equivalent of £60,860, over the past year, compared to a rise of just 7.7% (£11,962) for flats.

In terms of regional price performance, Wales moved back to the top of the table in July with annual inflation up by 14.7%, valuing an average property in the principality at £222,639. This was followed by the south west of England (up by 14.3%) and Northern Ireland (up by 14%).

London continued to record slower annual house price growth compared with other parts of the UK. But its figure of 7.9% was the capital’s largest increase in five years.

Russell Galley, Halifax’s managing director, said: “Looking ahead, house prices are likely to come under more pressure as market tailwinds fade further and the headwinds of rising interest rates and increased living costs take a firmer hold.”

Martin Beck, chief economic adviser to EY ITEM Club – an economic forecasting group – said: “After Nationwide’s measure of house prices showed a 0.1% rise in house prices in July, the Halifax measure went one further, delivering an outright fall. 

“Granted, the fall of 0.1% on June’s level was modest, while annual growth stood at a still-strong 11.8%. But July’s decline was the first fall since June 2021, and consistent with a housing market increasingly under pressure from a variety of headwinds.”

Nicky Stevenson, managing director of national estate agent chain Fine & Country, said: “The supply crunch which underpinned the housing market boom has begun to ease in recent months and the pace of price growth has softened slightly as a result.”

She added: “Meanwhile cheap debt is fast disappearing and, against this backdrop, we can expect to see a dampening effect as purchasing power continues to be eroded.”

2 August: Differences Emerge In Direction of Price Growth Travel

• UK house prices continue to rise, but key indices report different directions of travel
• Nationwide reports rise in annual growth rate, Zoopla records slight dip
• House price growth strongest in Wales at 11.1%

A difference has emerged over the direction of travel in two of the UK’s major house price indices both published today, writes Andrew Michael. 

The Nationwide house price index reported that the value of an average UK home rose by 11% to £271,209 in the year to July 2022. The annual rate of growth was higher than the 10.7% it calculated the previous month.

But the property portal, Zoopla, said that the price of an average UK home rose by 8.3% to £256,600 in the year to June 2022, a drop from the figure of 8.7% it reported a month earlier.

Zoopla added that June’s price growth was the lowest figure since October 2021 and the slowest rate it had recorded this year.

According to Nationwide, average house prices rose by 0.1% from June to July this year, the twelfth monthly increase in a row.

Robert Gardener, Nationwide’s chief economist, said: “The housing market has retained a surprise degree of momentum given the mounting pressures on household budgets from high inflation, which has already driven consumer confidence to all-time lows.”

Mr Gardener admitted there were “tentative” signs of a slowdown in activity, thanks to a dip in the number of mortgage approvals for house purchases in June, but this was yet to feed through to the price growth figures.

Around the regions, Zoopla said that, at 11.1%, prices rose fastest in Wales over the past 12 months to June this year, with the south west of England and the East Midlands also recording double-digit growth of 10.9% and 10.2% respectively.

Resilient market

Despite increasing economic headwinds, characterised by soaring inflation and rising interest rates, combined with a cost-of-living squeeze, Zoopla said that the housing market had remained resilient.

The company acknowledged that demand for homes has slowed over the course of 2022 but remains 25% above average over the last five years and on a par with the figure it recorded this time in 2021.

Richard Donnell, executive director of research at Zoopla, said that the ongoing impact of the Covid-19 pandemic provided the opportunity for flexible working and continued to support a desire to move amongst homebuyers.

“This is a big reason why the market is not slowing as fast as some might expect. Demand remains for sensibly-priced homes, especially in more affordable areas,” Donnell commented.

Later this week, the cost of variable rate and tracker-linked home loans will rise for the sixth time in seven months if, as anticipated, the Bank of England’s Monetary Policy Committee decides to hike the all-important bank rate by a figure of between 0.25% and 0.5%. 

Martin Beck, chief economic adviser to the EY ITEM Club, says: “With 80% of the stock of mortgages at fixed interest rates, rising mortgage rates will initially affect potential buyers rather than existing owners, and most mortgage-holders have time to adjust to more expensive mortgages.”

According to the Office for National Statistics (ONS), the average home in England now costs 8.7 times average disposable household income, making a property’s affordability the worst it has been since 1999 when records began.

The ONS said that the ratios for Wales and Scotland were 6x and 5.5x respectively, each below their peaks recorded 15 years ago.

20 July: Prices Rocket In Year To May, Says ‘Most Comprehensive’ Survey

The value of an average home in the UK increased by 12.8% in the year to May 2022, according to the latest data from the Office for National Statistics (ONS) – a rise from 11.9% recorded in the year to April.

The figures – which, unlike other house price indices, are based on completed sales data and not mortgage approvals or asking prices – put the average cost of a UK home at £283,000 in May. That’s £32,000 higher than this time last year.

On a monthly basis – and when seasonally adjusted – UK house prices increased by 0.9% between April and May, which was higher than the 0.4% registered in the previous month.

National picture

Wales continued to lead the charge, registering the biggest house price increase of 14.4% over the 12 months to May. It puts the cost of an average home in the country at £212,000.

In England, average house prices increased by 13.1% over the period to reach £302,000.

The property market in Scotland saw a 11.2% rise, putting average home values at £188,000, while Northern Ireland saw a 10.4% rise to £165,000.

On a regional level, the South West recorded the highest annual house price growth, with property values increasing by 16.9% in the year to May – an even higher rise than the 14.7% recorded in the year to April.

The lowest annual house price growth was seen in London, where average prices increased by 8.2% over the 12 months to May. However, average prices in the capital still stood north of half a million pounds in May at £526,000.

This compares to an average of £154,000 in the North East, the region in which property is at its cheapest.

Climbing costs

The latest evidence of soaring property prices coincides with new inflation figures also published today which show that the cost of living was 9.4% higher in June compared to 12 months ago. It reflects relentlessly rising prices of energy, food and fuel.

Those trying to buy their first home or remortgage their current one will also be facing interest rates that have risen five times since the end of last year, and look set to climb again as the Bank of England attempts to counter rising inflation.

Jeremy Leaf, a London estate agent and former chairman of the Royal Institution of Chartered Surveyors (RICS), said: “As we are finding at the sharp end, prices are continuing their upward path, despite the impact of 40-year high inflation and five successive interest rate rises.

“The continuing lack of choice, combined with a desire to take advantage of mortgage offers at super-low rates before they expire, have given the market added impetus.”

He added that, while ‘a little dated’ the ONS produced the most comprehensive of all house price surveys.

18 July: Rightmove Revises 2022 Forecast Upwards As Prices Continue To Soar

• Annual growth forecast now 7%, up from 5%
• Asking prices in June at new record of £369,968
• Rising costs will cool market in second half of 2022

Rightmove has revised its full-year 2022 house price forecast from 5% to 7% growth, as monthly values climbed for the sixth consecutive month.

Asking prices in June were 0.4% – or £1,354 – higher than the previous month, taking them to new record levels of £369,968, according to the property portal’s latest house price index.

Despite a cooling market – with buyer demand down 7% compared to June 2021 – the relentless price increases are largely being underpinned by record low volumes of homes for sale.

And while buyer demand is down on last year, it is still far exceeding ‘normal’ levels, said Rightmove, at 26% higher than ‘frenzied’ pre-Covid June 2019. Conversely, available homes for sale are 40% down compared to that period.

It is this slow rate of ‘stock recovery’ which has led the UK’s largest property portal to revise its growth forecasts for 2022 upwards from 5% to 7%.

There are indicators however, that a more balanced market could be on the horizon with a 13% increase of sellers recorded in June this year compared to 12 months ago, while demand for homes is likely to tail off in the face of rising living costs.

For this reason, Rightmove’s annual growth forecast at 7%, is lower than 9.3% it’s currently running at.

Those buying for the first time without the benefit of equity rises in an existing home, face a double-whammy of record prices and rising interest rates. Rightmove calculates that mortgage payments are now 20% (or £163) higher every month in June compared to the start of the year.

Economic and political uncertainty is prompting buyers across the board to lock in their mortgage rates for the longer term – especially as there is no longer a discernible difference in cost.

Tim Bannister, director of property science at Rightmove, pointed out that the average interest rate on a 75% loan-to-value fixed rate mortgage is now 2.9%, regardless of whether it’s on a two- or five-year term.

He said: “The challenges presented by rising interest rates and the cost of living will no doubt have an effect throughout the second half of the year, as some people reconsider what they can afford.

“However, there is also anticipation among would-be home-movers that personal finances may become even more stretched in the coming months, with further interest rate rises expected and the energy price cap jumping again in October.

“Given the political and economic uncertainty, those who want to move this year, particularly first-time buyers, may seek some financial certainty by locking in longer fixed-rate mortgage terms now before their monthly outgoings increase again.”

14 July: Rents Record Biggest Annual Rise In 16 Years

• Average monthly rent £1,126
• Rents up 11.8% in year to June
• Annual growth fastest in London

The average cost of renting a home in the UK (outside London) increased by 3.5% in the second quarter of the year compared to the first quarter, writes Bethany Garner.

Annually, the cost of rent was 11.8% higher in June 2022 than 12 months ago, according to data from Rightmove, which analysed 332,460 rent charges. Inflation in the UK currently stands at 9.1%.

The figures mark the highest annual increase the property website has recorded in 16 years.

The average monthly cost of renting stood at a record £1,126 in the second quarter of the year, while in Greater London this figure was £2,257. 

Annual rental growth in the capital, at 15.8%, was the highest ever annual rise of any region.

By the end of the year, Rightmove predicts average asking rent growth to reach 8%, revised upwards from the 5% it predicted at the start of the year.

Driving the sharp increases is a shortage of available properties and high tenant demand. The number of available rental properties has fallen by 26% year-on-year, while demand is up 6%.

Tim Bannister, director of property science at Rightmove, said: “The story of the rental market continues to be one of high tenant demand but not enough available homes to meet that demand.

“While stock levels are beginning to improve, with June seeing the highest number of new rental listings coming to market so far this year, the wide gap that has been created between supply and demand over the last two years will take time to narrow. Until then, this imbalance will continue to support asking rent growth.”

This gap between supply and demand is beginning to show signs of narrowing — albeit slowly — with the number of available rental properties rising 8% in the year to June. 

Rightmove also found that 34% of landlords are planning to expand their property portfolio over the next 12 months.

7 July: Halifax Reports Record Average Property Price

• Average property worth record £294,845
• Prices up 13% in year to June 
• Annual growth strongest in Northern Ireland

The average UK property rose in price by 13% to a record £294,845 in the year to June 2022, according to the latest property market data from Halifax, part of the Lloyds banking group, writes Andrew Michael.

The company said the annual growth figure is the highest since 2004 and described the UK housing market as defying “any expectations of a slowdown”.

It added that house prices jumped by 1.8% in June this year, the 12^th monthly price rise in a row, and the largest month-on-month increase in 15 years.

Regionally, the largest annual rises in June were recorded in Northern Ireland where the average property price increased by 15.2% to £187,833. This was followed by Wales, where prices now stand at £219,281, a rise of 14.3%.

The South West was England’s strongest performer with average properties worth £308,128, a hike of 14.2% on the year.  

The latest house price figures are set against a backdrop of rising UK interest rates and steepling inflation – currently at 9.1% and expected to climb higher – plus a wider cost-of-living crisis raising fears of recession.

Russell Galley, Halifax managing director, blamed the UK’s current supply-demand imbalance as the continued reason behind the nation’s surging house prices: “Demand is still strong, though activity levels have slowed to be in line with pre-Covid averages, while the stock of available properties for sale remains extremely low.”

Nicky Stevenson, managing director of national estate agents Fine & Country, said: “We are seeing house price growth continue to spike even as the UK economy edges closer to recession. The slowdown predicted by so many has yet to materialise in any real sense, despite an increase in borrowing costs and a squeeze on household incomes.

“Existing homeowners continue to make huge gains with competition among buyers still at fever pitch. While a more aggressive tightening of monetary policy is anticipated later in the year, the cooling effect is likely to be gradual given the acute shortage of housing stock which persists right around the country.”

1 July: Zoopla Sees Lowest Monthly Price Growth Since 2019

• Average prices in May at £251,550
• Year-on-year growth drops to 8.4%
• Wales sees highest annual growth of 11.4%

The price of an average UK home rose by 8.4% in the 12 months to May 2022, according to Zoopla’s latest house price index, out today. This is down on the April figure of 9.2%.

A typical UK property now costs £251,550, which is just 0.1% higher than April’s average. This represents the lowest monthly growth rate recorded by the property portal since December 2019. 

It says demand for homes is 40% higher than the UK’s five-year average, but is beginning to fall to typical levels. 

Gráinne Gilmore, head of research at Zoopla, said: “There are many factors supporting the price growth seen since the start of the pandemic, not least the continued imbalance between demand and supply, but the increasing cost of living, increasing mortgage rates for buyers and cloudier economic outlook will act as a brake on house price growth through the rest of the year.”

Wales leads price growth

Wales has experienced steeper price growth than any other UK region, with the cost of a typical home rising 11.4% year-on-year. The average house in Wales now costs £192,500, an increase of £32,000 compared with 24 months ago. 

London has seen the slowest growth, with an annual price rise of just 3.9%. However, London remains the most expensive region overall, with an average home costing £516,100. 

Of UK cities, Nottingham experienced the steepest year-on-year house price growth (10.4%) Zoopla found, followed closely by Bournemouth (10.2%). 

Edinburgh underwent the smallest year-on-year price increase, outside London, of 4.3%, while Aberdeen was the only UK city where average house prices have dropped year-on-year, by 2.5%.

Rising mortgage rates

Zoopla suggests market growth is trailing off in part due to the increasing cost of mortgages. Following the Bank of England’s decision to increase its base rate, mortgage rates have risen in turn. 

For a £250,000 mortgage with a 25% deposit, buyers can now expect an average rate of 3.37% on a five year fixed-rate loan, compared with the 2.64% average seen in December 2021. In practice, this equates to an extra £870 in annual mortgage payments.

Nick Leeming, chairman of estate agent Jackson-Stops, said: “The slower pace of growth overall is a sign that economic headwinds are coming down the tracks.

“What we are seeing is more supply coming to the market in most regions, partly in the belief that house prices are peaking, but also to lock in the best mortgage based on a 25% deposit and an average-price home.”

With the base rate expected to rise further in 2022, Ms Gilmore says buyers should avoid delaying their purchase: “Those who want to make a move should investigate their options sooner rather than later. Mortgage rates are likely to continue to climb, so locking into a rate shortly could save hundreds (of pounds) over the long-term.”

30 June: Price Growth Still Double Digit, Pace Begins To Slow

• Average property worth £271,613
• Prices up 10.7% in year to June 
• Annual growth strongest in South West

Average UK house prices grew by 0.3% in June, marking the 11th consecutive monthly increase recorded by Nationwide. Year-on-year, the cost of a typical UK home has increased by 10.7%.

Although prices continue to rise, growth is slowing down. In May, prices grew by 0.9%, and year-on-year growth stood at 11.2%.

Robert Gardner, chief economist at Nationwide, said: “The price of a typical UK home climbed to a new record high of £271,613, with average prices increasing by over £26,000 in the past year.

“There are tentative signs of a slowdown, with the number of mortgages approved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer enquiries. 

“Nevertheless, the housing market has retained a surprising amount of momentum given the mounting pressure on household budgets from high inflation.”

Regional differences

South West England has overtaken Wales as the UK region with the strongest annual price growth. 

House prices in the South West have grown 14.7% year-on-year, closely followed by East Anglia, where the average price has risen by 14.2% in the last 12 months.

In Wales, year-on-year growth stands at 13.4% – a 1.9% drop compared with the first quarter of 2022. 

House prices in London grew by 6% year-on-year, down from 7.4% recorded in the first quarter of 2022.

Mr Gardner said: “These trends may reflect a shift in housing preferences. Our housing market surveys have pointed to the majority of people looking to move to less urban areas.”

In Scotland, too, house prices are growing at a rate below the UK average. The price of a typical home in Scotland has risen by a comparatively low 9.5% year-on-year. 

House prices in Northern Ireland have grown by 11% year-on-year – similar to the growth experienced last quarter.

Downward drift

Commenting on Nationwide’s latest figures Nicky Stevenson, managing director of estate agent Fine & Country said: “House price growth continues to drift downward in response to mounting pressures in the broader economy.

“Increased borrowing costs have come at a time when disposable incomes are already shrinking and the UK is edging closer to recession. These pressures are bound to stretch affordability in the months ahead with inflation still to peak and more aggressive monetary tightening now being signalled by the Bank of England.”

Lawrence Bowles, director of research at Savills, expects house price growth to keep slowing down: “As the Bank of England warns it may hike the base rate by 0.5% in August, the outlook for the rest of the year becomes ever more contingent on mortgage costs.

“We predict that rising rates and an evening-out of supply and demand mean we’ll see price growth ease back to 7.5% by the end of this year.”

25 June: Halifax Sees UK Home Affordability Slump To Record Low

Buying a home is more difficult than ever, thanks to rapidly-rising property prices continuing to outstrip average earnings, says mortgage lender Halifax.

According to its monthly house price index, a typical home now costs 7.1 times the average income of a full-time worker in the UK. This marks the highest house price-to-earnings ratio since Halifax – once the world’s largest building society, now part of Bank of Scotland – began collecting data in 1983.

Homes have become less affordable even since 2020, when a typical home cost 6.1 times average salary.

That’s because, between the start of 2020 and the first quarter of 2022, average house prices rose by 16.8% compared to a 2.7% average growth in income, the research found.

The average cost of a UK home in the first quarter of this year stood at £279,431, while earnings for a full-time employee stood at £39,402.

Andrew Asaam, mortgages director at Halifax, says he expects the trend to reverse: “With interest rates on the rise as a means of combatting inflation, it’s unlikely house prices will continue to grow at the pace we’ve seen recently. This should see the gap between average earnings and property prices narrowing over time.”

Increase in first-time buyers

Despite low levels of affordability, the UK housing market has been highly active in the last 18 months. Last year, more than 409,370 first-time buyers purchased a home – a 35% increase compared to 2020 and a record high, said Halifax.

Mr Asaam added: “There’s no question that the economics of buying a home have changed significantly over the last couple of years. Soaring property prices and slower wage growth have combined to stretch traditional measures of housing affordability. 

“However, we also know from strong transaction levels that demand has remained extremely strong over that period.”

Most and least affordable areas

According to Halifax analysis, homes in London remain the least affordable in the UK, costing 9.7 times what the average Londoner earns in a year. Homes in the South East of England were only slightly more affordable, at a price-to-earnings ratio of 9.3.

Homes in Northern Ireland and Scotland were found to be the most affordable, costing 5.1 times the average regional salary.

Homes are most affordable in Scotland’s Inverclyde, where average property costs just 3.1 times what locals typically earn.

The region with the biggest drop in affordability between 2020 and 2022 was Pembrokeshire. In the first quarter of 2022, the area’s price-to-earnings ratio stood at 6.9, compared with 4.3 at the beginning of 2020. 

Halifax suggests increased demand for rural homes is the main driver for this change.

Despite having the least affordable homes in the UK overall, Westminster and the City of London have experienced the greatest improvement in affordability since the start of 2020. 

The average home in these districts now costs 14.5 times the local annual income, compared with 16.8 times at the start of the pandemic. 

22 June: ONS Reports 12.4% Rise In Property Prices 

• Average UK property worth £281,161
• Prices up 12.4% in year to April 2022
• Annual growth highest in Wales and Scotland at 16.2%

Today’s house price data from the Office of National Statistics (ONS) shows property prices continuing to rise, with a 1.1% increase in March alone and a higher-than-expected 12.4% leap in the year to April.

Kevin Roberts, director at Legal & General Mortgage Club, said: “Even following last year’s frenetic levels of activity, it is clear to see that the UK housing market hasn’t yet run out of steam, even if there are signs that momentum is starting to stabilise.”

The annual increase in property prices had previously slowed from 11.3% in the year to February 2022 to 9.8% in March. 

In terms of regional variations, England experienced an annual increase of 11.9% compared to 16.2% for both Wales and Scotland. However, average house prices remain higher in England at £299,249 compared to £211,990 in Wales and £187,954 in Scotland.

The South-West posted the highest yearly price increase in England of 14.1%, followed by 13.3% in the North West. 

London continued to experience the lowest annual growth of 7.9%, while the East Midlands and the South East saw monthly price falls of 0.5% and 0.3% respectively in March.

House prices increased by 15% for detached properties, compared to 8% for flats.

This report is likely to put further pressure on prospective house buyers who are already facing higher interest rates and inflationary increases in everyday spending.

However, the property market is expected to start to cool over the coming months. Lawrence Bowles, director of research at Savills, forecasts “average values to rise by a total of 7.5% in 2022, as affordability pressures are expected to substantially moderate further price growth for the remainder of this year.” 

But he also warns that the “news that the Bank of England will remove current affordability testing from August could mitigate some of the impact of higher interest rates, and, in theory, could open a little more capacity for house price growth beyond this year.”

The next ONS house price report is due on 20 July.

20 June: Rightmove Reports Record Average Property Price

• Average UK property worth record £368,814
• Prices rose 9.7% in year to June 2022
• Annual growth strongest in Wales at 15.3%

The average UK property rose in price by 9.7% to a record £368,814 in the year to June 2022, according to the latest house price index from Rightmove.

The property portal says average prices grew by 0.3%, or £1,113, in June, the fifth consecutive month that UK property values have increased.

But Rightmove added that the latest increase was the smallest since January this year and predicted that affordability constraints – caused by a growing cost-of-living crisis, rising interest rates and strong inflationary headwinds – will have a greater influence on market behaviour in the coming months.

The company says the prevailing economic climate, coupled with more properties coming onto the market, would likely lead to several month-on-month price falls during the second half of the year.

Rightmove predicted that annual house price growth by the end of the year would stand at about 5%.

Last week, the Bank of England raised interest rates to 1.25% in a bid to stave off runaway UK inflation. Consumer prices rose by 9% in the year to April 2022 and the expectation is that this figure will continue to increase in the coming months before levelling-off in 2023.

Rightmove is warning that a “conveyancing log-jam” means those looking to move this year would need to act soon. It is currently taking 150 days on average to complete a purchase after agreeing a sale, 50 days longer compared with the same period in 2019.

At a regional level Wales, with a figure of 15.3%, recorded the strongest annual house price growth to June. Next came the South West of England (12.9%), followed by the East Midlands (12.5%), and the West Midlands (11.5%). The slowest growth over the past 12 months was recorded in London (4.9%).

Rightmove’s Tim Bannister said: “The exceptional pace of the market is easing a little, as demand gradually normalises and price rises begin to slow, which is very much to be expected given the many record-breaking numbers over the past two years.

“Entering the second half of the year, we anticipate some further slowdown in the pace of price rises, particularly given the worsening affordability challenges that people are facing.”

16 June: Renters Reform Bill To End No-Fault Evictions

The government will today (16 June) publish its Renters Reform Bill, which is set to offer greater protection to residents in England’s 4.4 million privately rented households. 

The bill was first proposed in April 2019, but delayed due to the impact of coronavirus on the housing sector. Separate rules apply in the other UK nations.

The White Paper introducing the Bill promises greater protection for private tenants in England including:

• An end to no-fault evictions

No-fault evictions allow landlords in England to evict tenants without reason, with as little as eight weeks’ notice.

According to housing charity Shelter, over 200,000 private renters in England were served a no-fault eviction notice between April 2019 and April 2022. 

The Bill will bring this practice to an end, meaning landlords in England cannot evict their tenants without a legitimate reason.

No-fault evictions were banned in Scotland in 2017.

• Renting to families and benefits recipients

Private landlords will no longer be able to refuse to rent to families, or people who receive benefits. 

They must in future consider all applications, and cannot place a blanket ban on applicants receiving benefits. 

• Expanding the Decent Homes Standard

The set of standards that rented social housing must meet — the Decent Homes Standard — will be extended to private sector rented homes. 

These will all have to be in a good state of repair, be free from serious health and safety hazards, and have clean and appropriate facilities. 

The government will also explore the possibility of introducing a landlord register, similar to the register in Scotland. 

This would help local authorities keep track of landlords operating in the area to help uphold housing standards. 

Private tenants will be able to request to keep a pet in their home. Landlords will be legally required to consider the request, and cannot refuse without a good reason. 

All private tenants are set to be moved onto a periodic tenancy – often referred to as a ‘rolling contract’.

This means the tenancy is automatically renewed at the end of a defined period, unless the tenant decides to end it, or the landlord ends it for a valid reason. 

Polly Neate, chief executive of Shelter, said: “The Bill is a gamechanger for England’s 11 million private renters. Scrapping unfair evictions will level the playing field. For the first time in a long time, tenants will be able to stand up to bad behaviour instead of living in fear.”

June 14: Cost Of Renting Soars To Record High

Average rental costs in the UK reached an all-time high in May, standing at £1,103 per calendar month. The figure is 1.1% higher than in April and 10.6% up on this time last year.

The figures are from the latest Rental Index from Homelet, which uses data on ‘achieved rents’ for recently-agreed tenancies in the private rented sector.

It found that every region in the UK has seen annual rental growth, while every region with the exception of the North East (where rents fell in May by 0.7%) has seen monthly rental growth.

In London, average rents in May stood at £1,832 per calendar month – an increase of 1.6% compared to April and a staggering 15.7% up on last year.

The capital was the region with the highest annual rental growth.When London is stripped out of the UK average, rents stand at a typical £928 a month – still a rise of 0.9% compared to April, and 8.7% higher than 12 months ago.

Northern Ireland saw the largest monthly rise, with rents 1.7% up in May on the previous month to an average cost of £733.

Commenting on the latest figures, Mike Dawson sales director at Homelet, said: “With continued universal pressure on households, we’ve been seeing tenants stay in properties for more extended periods.

“However, as the summer months approach – when we tend to see the highest volumes of new tenancies – average rents for new tenancy agreements will continue on an upward trajectory. ”

Just over 4.4 million households live in the private rented sector in England, according to the most recent English Housing Market Survey, accounting for around 19% of all households. A further 4 million (17% of households) live in the social rented sector while 15.4 million (around 65%) own the home they live in.

9 June: Govt Extends Right To Buy To Housing Association Tenants

Prime Minister Boris Johnson today announced plans to expand the government’s Right to Buy scheme to enable housing association tenants to purchase their home. 

This will extend the scheme, under which council house tenants can buy their property, to an additional two million people. 

Mr Johnson has proposed that housing benefits could be counted as income for would-be buyers when applying for a mortgage.

Commenting on the change a spokesperson from Santander, one of the UK’s biggest mortgage providers, said: “We welcome any initiative that will support more people in buying their own home. As a responsible lender, we will be looking at the proposals to understand the detail and the impact on affordability.”

Changes may also be made to housing benefit rules so that recipients could build up savings for a deposit via a Lifetime ISA or Help to Buy ISA. At present, those with more than £16,000 in savings are not eligible for housing benefit.

The Centre for Policy Research (CPR), a right-of-centre political think tank, welcomed the move. Robert Colvile, director of the CPR, said: “The government’s commitment to home ownership, and the Right to Buy, is hugely welcome. However, we also urge the Government to go further in boosting ownership among tenants of all tenures.”

Labour’s shadow levelling up secretary, Lisa Nandy, says the Right to Buy plans could worsen the housing crisis by removing affordable rented housing from the UK market.

Polly Neate, chief executive of the housing charity Shelter, commented: “Hatching reckless plans to extend Right to Buy will put our rapidly shrinking supply of social homes at even greater risk.”

The government says this risk would be mitigated by setting a cap on the number of housing association properties that can be sold, while committing to replacing each home sold.

When the Right to Buy scheme was first introduced in 1980, around 4.5 million council house tenants purchased their home. In the period from 2020 to 2021, however, just 9,319 social tenants made use of the scheme. 

By extending the policy to housing association tenants, the government hopes to increase home ownership rates. According to a 2021 Ipsos Mori poll, 81% of people want to own their own home rather than rent.

8 June: Lack Of Homes Props Up Slowing Market – Halifax

• Prices increased by 1% in May – the 11th consecutive monthly rise
• Annual inflation slows to 10.5%
• Average property in May worth a record £289,099
• House prices increase 74% in 10 years

Average house prices grew by 1% in May – or £2,857 – representing the 11th consecutive monthly rise, according to the latest house price report from Halifax.

The annual rate of inflation remained in double digits at 10.5%, although this marked the lowest rise since the start of the year.

Average house prices now stand at a fresh all-time high of £289,099, said the UK’s largest mortgage lender and in the last decade have climbed by a staggering 74% (or £123,016).

Despite mounting cost of living pressures, the imbalance between supply and demand for homes is the main driver behind the continued climb in property prices. 

However, according to Russell Galley, chief economist at Halifax, the impact of this varies according to the type of home that house hunters are searching for: “Compared to May last year, you’d need around £10,000 more to buy a flat, but an additional £50,000 for a detached home,” he said.

Regional splits for house price inflation

The biggest annual rises in May were recorded in Northern Ireland where the value of an average property increased by 15.2% to a current £185,386. 

The South West of England also recorded a strong rate of annual growth at 14.5%, with an average property costing £305,173. Wales posted rises of 13.7%, taking typical values to £216,120. 

Annual growth was slowest in London at 6.3%, yet the cost of a home in the capital still stands at a heady £541,942 on average. 

In Scotland, growth was also slower relative to the rest of the UK, with annual inflation at 8.3%. A home in the country now costs an average £198,288. 

Further evidence of a cooling market

Reflecting other recent house price reports, Halifax’s house price index for May shows signs of a cooling market, due largely to mounting inflationary pressures feeding into reduced mortgage activity.

Amanda Aumonier, head of mortgage operations at broker Trussle, said of today’s report: “The current economic backdrop is extremely challenging, and households have already taken the brunt of soaring inflation and an unprecedented increase in the cost of living. 

“An increase in interest rates by the Bank of England has already added over £1,000 to mortgages this year and with the BoE’s target to increase interest rates to 2% by the end of the year, homeowners should expect to be paying much higher monthly payments.

She added that, for this reason, homeowners may want to look to find certainty where they can. “Long-term mortgage deals are very competitive at the moment. There is just 0.45% interest separating a 2-year fix from a 10-year fix. And with interest rate hikes all but a certainty, buyers might want to think long term when selecting their mortgage deals.”

1 June: Double-Digit House Price Growth, But Market Set To Slow

• Annual house prices up 11.2% in May
• Rate of annual growth slower than last month
• Average UK home costs £269,914 – 6.9 times average earnings

House price increases in May remained firmly in double digits with average values 11.2% higher than 12 months ago. However, in further evidence of a cooling market, the figure was down on April’s 12.1%, according to the latest house price data from Nationwide.

On a monthly basis however, seasonally-adjusted prices were 0.9% higher in May than April – a bigger rise than the 0.4% recorded between April and March, said the UK’s largest building society.

Following 10 consecutive monthly rises, the average cost of a UK property now stands at £269,914.

Robert Gardner, chief economist at Nationwide, said: “Despite growing headwinds from the squeeze on household budgets due to high inflation and a steady increase in borrowing costs, the housing market has retained a surprising amount of momentum.

“Demand is being supported by strong labour market conditions, where the unemployment rate has fallen towards 50-year lows, with the number of job vacancies at a record high. At the same time, the stock of homes on the market has remained low, keeping upward pressure on house prices.”

Mr Gardner said he expected the housing market to slow as the year unfolds with household finances likely to remain under pressure and inflation – which stood at 9% in the 12 months to April – set to reach double digits if the cost of energy remains high.

He added that measures of consumer confidence have already fallen towards ‘record lows’, while interest rates are widely expected to rise further, feeding through to the cost of mortgages. Bank rate is currently at 1%, having risen from 0.1% since the end of last year, with the next decision scheduled for 16 June.

Housing market in 1952

To mark the Queen’s Platinum Jubilee, Nationwide also illustrated the stark differences in the housing market between today and 70 years ago when the lender also began to produce its first house price data.

Mr Gardner said that, “the housing market was very different back in 1952, with just 32% of households owning their own home, compared to 65% today.”

He added that in 1952, the UK average house price was £1,891 (around £62,000 in today’s money) which was around four times’ average earnings. Today, the average property costs £269,914, according to Nationwide’s latest figures, around 6.9 times average earnings – a record high.

However, borrowing costs were higher back then, says Mr Gardner, with Bank Rate at 4%, compared to 1% currently.

30 May: April Property Market Still Hot But Clear Signs Of Cooling, Says Zoopla

• Average house prices in April top £250,000
• Annual rises slow to 8.4% from 9% in March
• Time to sell increasing as demand cools

Average property prices exceeded £250,000 for the first time in April, according to the latest report from Zoopla – but the market is reaching a ‘natural ceiling’ as pandemic-fuelled rocketing house prices begin to cool. 

Data from the property portal showed that average house prices in April hit £250,200, marking an annual inflation rate of 8.4% compared to 9% in March. And Zoopla forecasts that annual house price inflation will fall to +3% by the end of the year.

More than one-in-20 homes had its asking price slashed in April by an average of 9% or £22,500 – the widest discount margin seen for the last 18 months – while properties for sale are remaining on the market for longer. 

The average time a three-bedroom property is taking to sell increased to 18 days in April, up from 16 days in March. In London the increase was greater – from 17 days to 21 days.

Gráinne Gilmore, head of research at Zoopla said that, while current high levels of buyer demand is causing the market to move quickly, selling times will steadily increase as demand levels start to fall due to “changing sentiment around the cost of living and personal finances.”

The property market remains strongest in Wales in April for the 15th consecutive month, with house prices 11.6% up on last year, while annual growth in London is slowest at 3.6%, according to Zoopla, which bases its data on a combination of sold prices, mortgage valuations and agreed sales.

The cost of monthly mortgage repayments on a typical UK home (for a new mortgage deal) has risen by £71 a month to £852, since the start of the pandemic (April 2020) squeezing households already impacted by the cost of living crisis.

25 May: More Than A Quarter Of Lockdown Movers Regret Their Relocation

More than a quarter (27%) of people who moved during the pandemic in a bid for more green space now regret their decision, according to a recent survey by our online mortgage broker partner, Trussle.

During the UK’s lengthy Covid lockdowns, waves of urban dwellers opted to move to more rural areas, spurred on by opportunities to work remotely. 

But, two years on, 12% of the 2,000 movers surveyed by Trussle in May believed they rushed into the decision and a further 15% are considering moving again. 

Just under a third of homemovers (30%) believe moving in the last two years was definitely the right decision, while a further 18% said they are happy with the move but it’s taking longer than expected to adjust. 

Amanda Aumonier, head of mortgage operations at Trussle, commented: “There is no doubt that Covid-19 shifted homeowner priorities and, with the return to the office and normal life very much underway, it is understandable that many people are feeling unsure of their decisions.”

But Ms Aumonier also cautioned those who regret their move against charging into another: “Homeowners who are looking to buy should do so with caution as, with the market expected to slow, there is a real possibility of negative equity in the years to come. 

“Alongside this, the costs of moving properties should not be understated, especially at a time when household expenses are already stretched.”

The Trussle survey revealed that 24% of homeowners are considering remortgaging their property instead to fund home upgrades. This number has doubled over the last two years.

About a third (33%) of homeowners who planned to carry out home improvements intend to fit a new kitchen, making it the most popular form of improvement.

A further 28% planned to upgrade their bathroom, and 24% want to landscape the garden. 

It is unsurprising to see outdoor improvements so high on homeowners’ list of priorities, since 76% of adults surveyed by Trussle prioritise having a garden over access to a rail station or other public transport. 

The desire to carry out home improvements was highest among 18 to 35 year olds, with 49% of this group planning a remortgage to fund renovations.

23 May: Rightmove Reports Record Average House Price

• Average UK property price hits £367,501
• 10.2% price growth in year to May
• Stock of properties down 55% in three years

The average price of a UK home hit a record level for the fourth month in a row in May 2022, according to data from property portal Rightmove.

Its latest house price index shows that asking prices rose by 2.1% month-on-month, taking the average value to £367,701. Annual price growth to May this year stood at 10.2%, compared with 9.9% in April.

Rightmove says average properties jumped in price by £55,551 over the past two years, a period dominated by Covid-19. In the two years prior to the pandemic, average prices rose by £6,000.

The fourth consecutive monthly price record comes against a backdrop of rising interest rates as the UK grapples with steepling inflation that has led to a cost-of living crisis amongst millions of households.

Rightmove said neither the financial pressures being faced by UK households, nor the latest rise in the Bank of England bank rate – to 1%, announced earlier this month – do not appear “to have dented the motivation and urgency to move that are being felt by many”.

However, the company added there were signs that the housing market is beginning to ease. It said that the number of properties available to buy is 55% down on the levels recorded in 2019 and warned that UK supply and demand is likely to remain “out of kilter” for the remainder of this year.

Tim Bannister, Rightmove director, said: “People may be wondering why the housing market is seemingly running in the opposite direction to the wider economy at the moment. What the data is showing us right now is that those who have the ability to do so are prioritising their home and moving, and the imbalance between supply and demand is supporting rising prices.”

18 May: ONS – Annual House Price Inflation Eases In March

Rocketing house price inflation since the start of the pandemic in 2020 could be showing the first signs easing.

Average house prices in the UK increased by 9.8% over the year to March 2022, compared to 11.3% in the year to February. 

This is according to the latest house price report from the Office for National Statistics (ONS) which is based on completed sales data, rather than mortgage approvals or asking prices.

However, the latest rise still puts the cost of the average UK property at £278,000, which is £24,000 higher than in March 2021.

Regional split

Wales saw the biggest average increases, up 11.7% to £206,000, according to the ONS. It was followed by Northern Ireland which saw average increases of 10.4% to £165,000. 

England was next with average prices up 9.9% to £298,000, while Scotland saw the smallest average increase at 8.0%, up to £181,000.

London, once again, recorded the lowest annual growth of 4.8%.

Jonathan Hopper, chief executive of Garrington Property Finders, described the latest figures as “economic gravity finally catching up with the property market”, pointing out that the slowdown has been sharpest in the nations that had previously seen the fastest rises. 

“The value of an average home in Scotland rose by a modest 8% in the year to the end of March. Just a month earlier, annual price rises north of the border were running at over 12%.”

What’s the outlook?

Amanda Aumonier, head of mortgage operations at online mortgage broker Trussle, said that we are beginning to see “key indicators that a shrink in house prices is on the horizon”. 

As an example, she cites the ratio of average house prices to average earnings (HPE), which currently stands at 7.7– above even the previous peak of 7.5 seen just prior to the 2008 financial crash.

The mortgage market has also become increasingly challenging for buyers, according to Ms Aumonier: “We’ve seen Interest rates add over £1,000 to mortgages annually, and they are set to rise further to 2% by the end of the year. This could put homeowners under a tremendous burden if they have stretched themselves on short-term deals.”

She added: “The good news is that long term deals are very competitive at the moment. There is just 0.34% interest separating a 2-year fix from a 10-year fix. With interest rate hikes likely, buyers might want to think in the long term when selecting their mortgage deals.”

6 May: Halifax Reports Record Prices

• Average property worth record £286,079
• Prices rose 10.8% in year to April
• Growth strongest in Northern Ireland

The average UK house price grew by 10.8% in the year to April 2022, taking it to a record high of £286,079, according to the latest house price index from Halifax.

The mortgage lender says average prices grew by 1.1%, or £3,078, in April – this is the tenth month in a row that UK property values have increased, the longest run of continuous gains in six years.

Halifax adds that average property prices have risen in value by £47, 568 over the past two years.

It says housing transactions and mortgage approvals remain above pre-pandemic levels and a continued growth in new buyer enquiries suggests activity will remain heightened in the short-term.

Yesterday, in a bid to counter steepling inflation, the Bank of England raised interest rates to 1%, the UK’s fourth rate rise in less than six months. The increase means dearer home loans for customers with tracker and variable-rate mortgages in the short term, and more expensive fixed rates in the future. 

Halifax’s managing director, Russell Galley, acknowledged that “the headwinds facing the wider economy cannot be ignored”.

Galley added: “The house price to income ratio is already at its highest-ever level, and with interest rates on the rise and inflation further squeezing household budgets, it remains likely that the rate of house price growth will slow by the end of this year”.

Halifax reported that Northern Ireland, at 14.9%, overtook the South West of England (14.8%) in April as the UK’s strongest region for annual house price growth.

Elsewhere, several other regions also posted double-digit performance in April, including: Wales (14.2%); East Midlands (12.8%); and the South East (12.1%). The London region was responsible for the weakest growth (6.2%), although this figure was up on the 5.9% recorded a month earlier.

Amanda Aumonier, head of mortgage operations at Trussle, our online mortgage broking partner, said: “It’s only a matter of time until the cost-of-living crisis begins to catch up with the housing market. 

“Households are beginning to feel the effect of inflation, higher energy bills and the soaring cost of living and so are cutting back on day-to-day essentials. This will likely get worse with increasing interest rates.

“High loan-to-value mortgages will be a lifeline for those unable to save during this difficult financial period. As it stands, there are only fifty-six 95% mortgages available. As such, we would urge lenders to do all they can to responsibly look at introducing more high LTV deals to the market so that everyone can aspire to own their own home.”

5 May: What The Bank Rate Hike Means For Mortgages

Laura Howard, Forbes Advisor’s spokesperson, responds to today’s announcement of an increase in the UK Bank rate:

“Today’s decision by the Bank of England to raise interest rates to 1% came as little surprise. After all, the previous rise – back in March, to 0.75% – was the result of a vast majority (8-1) vote in favour by the Bank’s Monetary Policy Committee.

“The Bank uses interest rates as a tool to control rising inflation and CPI  stood at 7% in the 12 months to March 2022 – way above the government’s 2% target and the highest recorded for 30 years.

“It’s the same story in the US, which – just yesterday – saw the Federal Reserve increase rates from 0.5% to 1% in the wake of the highest inflation the country has seen in 40 years.

“While widely anticipated, the latest rise will come as worrying news for the nation’s millions of UK mortgage holders who are already grappling – or even unable to meet – the relentless rising cost of essentials, from energy bills and petrol, to the grocery shopping.

“Anyone paying their lender’s standard variable rate (SVR), or on any mortgage deal that’s linked to the Bank rate, will have to absorb an almost immediate impact in the cost of their monthly payments.

“As an example, the latest 0.25 percentage point rise will add around £25 onto the monthly cost of a £200,000 mortgage priced at a variable 2.5%. But for these borrowers, it’s the fourth blow of its kind since December last year – when the Bank rate stood at a much leaner 0.1%.

“First-time buyers and those looking to remortgage are likely to find that this, and previous, interest rate rises have already been factored into the cost of new mortgages.

“And, while homeowners who are part-way through a fixed-rate deal will be sheltered from rises for now, when the agreed term ends they are likely to land in an environment where new mortgage deals are considerably more expensive.

“With the rising cost of living not looking to dissipate any time soon, the fact this is also likely to result in further interest rate rises is something of a double whammy.

“In light of this fact, it might be worth considering reserving your next mortgage deal which you can typically do between three and six months in advance of it starting. This means essentially, securing rates as they are today and taking advantage of them in what is likely to be a higher interest rate environment later in the year. There is no obligation to take the deal so there’s nothing to lose if you change your mind.”

Financial pressure

Amanda Aumonier at our online mortgage broker partner, Trussle, added: “Homeowners are under incredible financial pressure and this interest rate rise will only add further fuel to the fire in the short term. Of course, the Bank of England needs to look long term, but for many this will be the straw that breaks the camel’s back.

“It is crucial that homeowners understand their options. In recent years, there was a credible case for a ‘wait and see’ approach that saw many households drift onto expensive SVRs in the hope that interest rates would fall even further. However, those days are well and truly behind us and the only way is up for interest rates.

“Therefore, we would urge anyone approaching the end of their mortgage term to speak to a broker. Our research shows remortgaging can save homeowners £4,000 per year.

Prior to the BOE adopting a new position in December 2021, interest rates had been at a historic low of 0.1% as the Bank tried to alleviate economic pressure from the pandemic. However, interest rates now stand at 1%, their highest rate since 2009.

4 May: Majority Of First-Time Buyers Delayed By Cost Of Living Crisis

The majority of first-time home buyers are putting off their purchase due to concerns over cost, according to a survey by Nationwide Building Society. 

Nationwide’s poll found that 70% of people who had planned to buy their first home in the next 12 to 24 months are delaying the purchase due to difficulties saving for a deposit. 

On average, these buyers expect to delay their purchase almost two years, while 19% said they would delay by at least three years.

The survey, which gathered responses from more than 2,000 people planning to buy their first home in the next five years, found the ongoing cost-of-living crisis is having a significant impact on people’s ability to save for a home. 

The majority (88%) of respondents say the crisis will affect their saving plans, while almost half (48%) have already reduced the amount they’re saving towards a deposit. A further 38% report dipping into their deposit fund to cover another expense.

Saving for a deposit is seen as the single biggest barrier to homeownership, with 28% of people in the Nationwide survey citing it as their main concern.

According to the Office for National Statistics (ONS), a 10% deposit on a typical first-time buyer home represents 60% of the buyer’s gross annual income, so this difficulty is unsurprising.

Faced with record- high house prices, 69% of people surveyed by Nationwide say they would consider moving to a different area to get on the property ladder. In Greater London, where house prices remain the highest in the UK, 79% of people say they would consider moving. 

Paul Archer, senior mortgage manager at Nationwide, says: “Building a deposit remains the single biggest barrier to homeownership today, with many people starting out facing a long uphill battle to save.

“The rising cost of living has made this even harder.”

4 May: Zoopla Reports Record Average Price

• Average UK home worth £249,700
• Average price up 8.3% in year to March 2022
• Wales records highest regional growth

The average price of a UK residential property rose to a record £249,700 in March this year, according to the latest data from Zoopla.

The property website’s house price index shows that average prices grew by 8.3% in the year to March 2022, down slightly from the 8.8% recorded a month earlier. Zoopla says that average price growth since the start of the pandemic in March 2020 stood at 13%, equal to a rise of about £29,000 over the two-year period.

The company believes house prices are being pushed up because buyer demand remains strong in the face of constrained supply. It says higher demand has also driven more transactions, with current levels of sales agreed running more than 20% higher than pre-pandemic levels.

Zoopla calculates that rising house prices mean 4.3 million UK homes have been pushed into a higher stamp duty (or national equivalent) bracket since March 2020.

The company reports that over a quarter (28%) of these properties, around 1.2 million homes, located in England and Northern Ireland have now exceeded the initial stamp duty threshold of £125,000.

In Wales and Scotland, rising house prices mean a further 360,000 homes have also breached the initial threshold where stamp duty becomes payable – £145,000 in Scotland and £180,000 in Wales.

At a regional level Wales, with a figure of 12.1%, recorded the strongest annual house price growth around the UK, the thirteenth month in a row it has hit this mark.

Zoopla reports that prices in the south west of England also achieved a double-digit return, up by 10.6% in the year to March. In contrast, annual price growth in London stood at 3.6% over the same period.

Gráinne Gilmore, head of research at Zoopla, said: “Buyer demand has been very strong since the end of the first lockdown in 2020, and the start of this year has been no exception. This has pushed millions more homes into higher stamp duty brackets, meaning that if they come to market, there is an additional cost for buyers.”

29 April: House price growth slows but market still ‘surprisingly’ buoyant

• Annual house price growth slows in April to 12.1%
• Average UK property is now worth £267,620
• 38% of people are ‘actively moving’ or ‘considering a move’

Average house price growth slowed in the year to April to 12.1%, from 14.3% recorded in March. However, it still marks the 11th time in the last 12 months that the rate of annual growth has been in double digits, according to the latest house price report from Nationwide – which puts the average value of a UK property at £267,620.

On a monthly basis, prices increased by 0.3% in April. This marked the ninth successive monthly rise, but was also the smallest gain since September last year.

Robert Gardner, chief economist at Nationwide, said: “Continued demand is being supported by robust labour market conditions, where employment growth has remained strong and the unemployment rate has fallen back to a pre-pandemic low.”

He added that the stock of homes available on the market is also still low, which is applying continued upward pressure on house prices.

More than a third either moving – or thinking about it

This month, along with the publication of its regular house price index, Nationwide conducted a survey of around 3,000 consumers which revealed that 38% were either in the process of moving or considering a house move.

This proportion was particularly high in London, where almost half said they were moving – or thinking about doing so. Motivation for around a quarter (24%) was to secure a larger property – a similar result to in April 2021. The exception was those aged 55 and above, where nearly 40% are looking for a smaller property and only 7% are in the market for a bigger one.

However, the proportion of those citing a ‘desire to get away from city or urban life or access to a garden’ and/or for ‘more outside space’ – largely a legacy of the pandemic – declined substantially to 12% and 15%, down from 25% and 28% in April 2021.

Cost of living crisis

With the housing market activity remaining ‘solid’ in April and mortgage approvals continuing to run above pre-Covid levels, Gardner said it’s ‘surprising’ that conditions have remained so buoyant given that mounting pressure on household budgets has severely ‘dented consumer confidence’.

He said: “Indeed, consumers’ expectations of their own personal finances over the next 12 months has dropped to levels last seen during the depths of the global financial crisis more than a decade ago.

“Moreover, housing affordability has deteriorated because house price growth has been outstripping income growth by a wide margin over the past two years, while more recently borrowing costs have increased – though they remain low by historic standards.”

However, according to Nationwide’s survey, 17% of those moving or considering a move said they were doing so at least in part to reduce spending on housing by either moving to a different area and/or to a smaller home. Mr Gardner also forecasts a slowdown in housing market growth as the rest of this year plays out.

He said: “The squeeze on household incomes is set to intensify with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high.

“Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”

Effects of inflation

Amanda Aumonier at our mortgage partner Trussle said: “It’s only a matter of time until the cost of living crisis begins to catch up with the housing market, and we can see signs of house prices beginning to slow in April.

“Households are beginning to feel the effect of inflation, higher energy bills and the soaring cost of living, and so are cutting back on day-to-day essentials. Therefore, it is absurd to think that the housing market will continue to defy this trend for much longer.

“The disparity between the housing market and the financial climate could be explained by the time it takes to purchase a home. It generally takes between six and 12 weeks to complete the buying process, so the market isn’t always reflective of the current situation – many people will have started the journey before they felt any financial pressure. 

“Given that affordability and an inability to save large deposits is set to become the key factor preventing people moving homes, it is essential that mortgage products reflect this. In particular, high loan-to-value mortgages will be a lifeline for those unable to save during this difficult financial period.

“As it stands, there are only 56 95% mortgages available, and we are urging lenders to do all they can to responsibly look at introducing more high loan-to-value deals to the market so that everyone can aspire to own their own home.”

April 25: Rightmove Reports Record Average Prices Topping £360,000

• Average property price hits record £360,101
• 9.9% price growth in year to April
• Properties selling faster than ever 
• 73% of transactions chain-free so far in 2022

The average price of a UK home hit a record level for the third month in a row in April 2022, according to data from property portal Rightmove.

Its house price index shows asking prices growing 1.6% month-on-month, or £5,537, bringing the average property price to £360,101 in April. Annual price growth stood at 9.9%.

Rightmove says the average property price has jumped by more than £19,000 in the past three months, the largest quarterly increase it has recorded. And property values are at record levels in each of the three market sectors it covers – lower, middle and upper – only the second time since 2007 the company had reported this scenario.

Quick sales

It adds that properties are selling faster than ever. In April this year, the average length of time to sell was 33 days, less than half the 67 days recorded in the same month three years ago. Rightmove says more than half (53%) of properties are selling for over their final, advertised asking price.

Tim Bannister, Rightmove director of property data, said: “With three new monthly price records in a row, 2022 has started with price-rise momentum even greater than during the stamp duty holiday-fuelled market of last year.

“The economic headwinds of strongly rising inflation and modestly rising interest rates are being kept at bay by the even stronger tailwind of property market momentum that has carried over from last year.”

Chain-free transactions

A separate report from estate agents Hamptons, has found that a record proportion of UK homes are being bought by buyers without a home to sell.

It found that, so far in 2022, nearly three-quarters (73%) of all buyers have been chain-free. This compares with 69% in 2021 and a low of 65% in 2010.

Hamptons attributes the rise in chain-free buyers to an increase in the proportion of homes bought by first-time buyers and investors.

Aneisha Beveridge, head of research at Hamptons, said: “Given chain-free buyers tend to complete quicker and sales are less likely to fall through, they are fast becoming the preferred option for sellers.”

23 April: First-Time Buyers To Be ‘Paying Mortgage In Retirement’

The next generation of homeowners may be paying off their mortgages into retirement, new data from our mortgage partner Trussle has revealed.

According to Trussle, house price inflation which has caused the average age of a first time buyer to rise to 32 from 29 a decade ago is to blame. 

Equally, a 75% year-on-year increase in first-time buyers taking out 35-year mortgages during the stamp duty holiday, in order to combat rising house prices. Over 60,000 first-time buyers did so.

The stamp duty holiday was introduced 8 July 2020 to encourage the purchase of property and buoy the housing market. The holiday came to an end on 30 September 2021 for England with the equivalent Land and Buildings Transaction Tax (LTT) holiday in Northern Ireland simultaneously ending.The  LTT holiday in Scotland drew to a close on 31 March 2021 and on 30 June 2021 in Wales.

The average house price in the UK is now £277,000 according to the latest Office for National Statistics figures, and according to Trussle most mortgage lenders require a minimum of a 10% deposit on a property.

A homebuyer purchasing a property for £277,000, who provides a 10% deposit on a 2.25%  rate mortgage can expect to pay £860 per month over the course of 35 years.

Alarming trend

Amanda Aumonier at Trussle says: “This is an alarming trend that has been brewing for years. When purchasing a home, buyers naturally think about the here and now, which typically means looking for ways to keep their payments as low as possible. 

“But, while taking out a longer term mortgage can be an effective way to keep short term costs low, you will end up paying more back in the long term. Not only this, but you could also still be paying off your mortgage during a period of life when your income begins to drop.”

However she says overpaying on your mortgage even by a little can help clear your debt faster: “For those able to get ahead of their mortgage payment, overpaying on your mortgage can significantly cut the term and therefore overall cost of your mortgage. Overpaying by as little as £50 each month can shave two years off your mortgage and save you £5,000.”

22 April: No More Ground Rent For New Leaseholders From June

Homebuyers in the market for a leasehold property in England and Wales will soon be able to cross the cost of ground rent off their list of annual outgoings.

In the first of a series of reforms to an antiquated leasehold system, the government has confirmed that the long-awaited ban on all new residential long leases will take effect from 30 June 2022. It will apply to retirement homes from no later than April 2023.

Annual ground rent has long been a controversial charge for owners of leasehold flats and houses. With no regulation and varying from lease to lease, freeholders and landlords can charge hundreds of pounds a year and provide no clear service in return.

Ground rents can also be set to escalate regularly after a given number of years, while some homeowners who bought directly from developers have seen costs double annually.

The government’s Leasehold Minister, Lord Stephen Greenhalgh said: “This is an important milestone in our work to fix the leasehold system and to level up home ownership. Abolishing these unreasonable costs will make the dream of home ownership a more affordable reality for the next generation of home buyers.”

Lord Greenhalgh said he ‘welcomed the move’ from many landlords who have already set ground rent on their new leases to zero, and he urged others to follow suit ahead of the June ban. Anyone preparing to sign a new lease on a home in the next two months should speak to their landlord to ensure their ground rent rate reflects the upcoming changes, he said.

Separate measures, announced by the government last year, include a new right for leaseholders to extend their leases to 990 years at zero ground rent, and an online calculator to help leaseholders find out how much it would cost to buy their freehold or extend their lease.

Timothy Douglas, policy and campaigns manager for trade body Propertymark, welcomed the news: “These unfair and restrictive charges levied on leasehold homeowners have in some cases been allowed to become a cash-cow and abolishing them has been a long time coming.”

The problems within the leasehold sector run much deeper than unreasonable ground rent charges, however.

A recent survey from Propertymark of more than 1,000 leaseholders revealed that, in some leasehold agreements, the freehold stipulates that homeowners must seek permission to make cosmetic alterations – with 10% being charged for doing so.

It found that, on average, freeholders charged homeowners £1,422 to enquire about installing double glazing, £887 to change the kitchen units, and £689 to replace the flooring.

Some even faced charges for changing the blinds (£526), and installing a new front door (£410).Mr Douglas said:  “These changes only legally restrict ground rents on new leases, so we hope they are a catalyst for further reform by the housebuilding sector itself and the UK Government that will release the estimated over one million existing homeowners who remain locked into these agreements.”

14 April: Record Rent Increases For Tenants In Britain

Private rents in Britain rose sharply in the last 12 months to reach an average £1,088 per calendar month (pcm) for properties outside London, according to data from Rightmove. 

This 10.8% increase from £982 pcm is the largest annual jump recorded by the property website.

Manchester and Liverpool saw the steepest increases, with average rents growing by 19.3% and 17.1% respectively. 

In the capital, rents reached a record average of £2,193 pcm in the first quarter of 2022. This represents an increase of 14.3% compared with this time last year, when the average London rent was £1,919.

According to Tim Bannister, director of property data at Rightmove, soaring rents are the result of increased demand and diminished supply: “On the supply side, we’re hearing from agents and landlords that tenants are signing longer leases, which has prevented some of the stock that would normally come back onto the market from doing so.

“When it comes to demand, we’re still seeing the effects of the pandemic, whereby tenants are balancing what they need from a home and how close they need to live to work with where they can afford.”

These record highs come at a time when many households are already feeling the pressure of an ongoing cost-of-living crisis, fuelled by rising prices across the board, from energy and fuel to groceries and Council Tax.

13 April: Annual House Price Inflation Soars To 10.9%

• Average price up 10.9% in year to February 
• Average cost of UK home at £277,000
• Wales is best-performing area

Average UK house prices rose by 10.9% in the year to February 2022, up from the 10.2% the previous month, according to the latest figures from the Office for National Statistics (ONS).

The ONS said the price of an average UK home stood at £277,000 in February, an increase of £27,000 on the same month last year.

Wales led the way in terms of the largest national house price increase, with the average property climbing in value by 14.2% to £205,000 in the 12 months to February.

Next came Scotland, which recorded a price rise of 11.7% to £181,000. England registered a rise of 10.7% to £296,000, while prices in Northern Ireland climbed 7.9% to £159,000.

In terms of UK regional performance, the South West and East of England each recorded the strongest annual growth with prices rising by 12.5% in the year to February 2022. 

Average prices in London rose by 8.1% over the same period. This was the weakest of the UK’s regions, although the figure was up sharply from the 3.8% registered by the capital in January this year.

Mortgage market

Amanda Aumonier, head of mortgage operations at online mortgage broker Trussle, said: “In the midst of a cost-of-living crisis, the property market seems at odds with the rest of the economic climate. All of the indicators show that house price growth is continuing to go from strength to strength.

“However, the dashboard warning lights are starting to light up. Households are projected to be worse off by around £900 per year from inflation alone, which will without doubt have a knock-on effect on the property market. Lenders are clearly beginning to realise this and are betting on an economic downturn impacting the property market.”

Aumonier added that in recent days, interest rates on five and 10-year mortgage products had begun to fall in line with, and in some cases drop even lower than, the rates on two-year home loans.

Nicky Stevenson, managing director at estate agent Fine & Country, said: “House price growth continues to move at a rate of knots and it remains unclear whether this marks the apex of this unprecedented boom. 

“At the moment, cash-rich buyers appear to be shrugging off the challenges that are mounting in the broader economy, but the picture may change in the summer as lenders reassess affordability tests.”

7 April: Halifax Sees Record Property Prices

• Average property hits record £282,753
• Prices up 11% in year to March
• Growth strongest in SW England

The average UK house price climbed by 11% in the year to March 2022, taking it to a record high of £282,753, according to the latest house price index from Halifax.

The mortgage lender says average prices grew by 1.4%, or £3,860, in March – the largest month-on-month increase since September last year.

UK house prices have risen consecutively for nine months. Halifax says the average UK property has increased in value by £28,113 in the past 12 months. The year-on-year rise is on a par with average annual UK earnings of £28,860 before tax.

The bank says south west England is the UK’s strongest-performing region, with annual house price growth of 14.6%.

Wales, which held the regional top monthly spot since the start of 2021, recorded a figure of 14.1% in the year to March. The average house price in Wales now stands at a record £211,942.

Elsewhere in the UK, property prices over the past year grew by 13% in Northern Ireland and 11.6% in south east England. Halifax says London was the UK’s weakest-performing area last month. But, with a figure of 5.9%, house prices are continuing to recover in the capital.

Russell Galley, Halifax’s managing director, said: “With 2021’s strong momentum continuing into the beginning of this year, the annual rate of house price inflation continues to track around its highest level since mid-2007.

“The story behind such strong house price inflation remains unchanged: limited supply and strong demand, despite the prospect of increasing pressure on household finances.”

Amanda Aumonier at online broker Trussle, Forbes Advisor’s mortgage partner, said: “House price growth continues to march to new heights. However, with an increasingly dire financial climate settling in, we may well see this appetite drop off in the coming months.

“Anyone taking out a mortgage now may want to look at longer term options. While two-year fixed mortgages are traditionally the most requested, five-year fixed mortgages are currently proving to be a popular choice.”

31 March: Nationwide reports 14.3% price growth in year to March

• Annual growth up 14.3% from 12.6% in February
• Average property now worth record £265,312
• Prices up by 21% on pre-pandemic levels

Nationwide building society’s latest House Price Index says the price of a typical UK home is at a record high of £265,312, with prices increasing by over £33,000 in the past year. 

It puts annual price growth at 14.3% in the year to March, notably higher than the 12.6% recorded in February, suggesting the traditional spring increase in demand for properties is well under way.

Prices are now 21% higher than before the pandemic struck in early 2020. Property values have been pushed higher as households seek accommodation suited to changing lifestyles, including more time spent working from home and new commuting routines.

Robert Gardner, Nationwide’s Chief Economist, said the pace of increase is the strongest since November 2004: “The price of a typical UK home increased by over £33,000 in the past year. 

“The market has retained a surprising amount of momentum given the mounting pressure on household budgets and the steady rise in borrowing costs. The number of mortgages approved for house purchase remained high in February at around 71,000, nearly 10% above pre-pandemic levels. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.

Mr Gardner added that significant savings accrued during lockdowns is also likely to have helped some prospective homebuyers raise a deposit: “We estimate that households accrued an extra £190bn of deposits over and above the pre-pandemic trend since early 2020, due to the impact of Covid on spending patterns. 

“This is equivalent to around £6,500 per household, although it is important to note that these savings were not evenly spread, with older, wealthier households accruing more of the increase.”

Despite the current upward pressure on prices, Mr Gardner believes the housing market is likely to slow in the quarters ahead: “The squeeze on household incomes is set to intensify, with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high. 

“The Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”

Mortgage impact

Amanda Aumonier at our mortgage partner, Trussle, said: “The fact we are still seeing such a level of activity in the market is likely because the availability and cost of mortgages has remained consistent throughout, ensuring products remain accessible. However, unless more strident measures are taken to tackle inflation, only time will tell whether price growth will continue in the long run.

“It is difficult to see how inflation will not start to impact the house buying pipeline, as buyers are forced to clamp down on their expenditure.

“The recent Spring Statement provided little protection for households against increasing inflation. This was particularly the case for middle income earners, who are typically next time buyers, and consequently this section of the property market could see even greater strain in the coming months.”

29 March: Zoopla Reports Record Average Property Price

• Average UK home worth £245,200
• Average price up 8.1% in year to February 2022
• Wales has highest regional growth 

The average UK house price rose to a record £245,200 in February 2022, according to the latest data from Zoopla.

The property portal’s house price index showed that average house prices grew by 8.1 % in the year to February, up on the 7.8% recorded a month earlier.

Zoopla reported that buyer demand across the UK was unseasonably strong, with demand for family houses more than twice as high as usual for early spring. 

The company said there had also been a rebound in the demand for properties in urban centres since the start of this year, as life in cities began to return to normal following the pandemic. 

Zoopla added that the number of homes listed for sale across the average UK estate agency branch had moved up slightly by 3.5% in the 28 days to 20 March. But the company said the stock of homes available to buy is 42% below the UK’s five-year average.

At a regional level Wales, with a figure of 11.8%, recorded the strongest annual house price growth – the 12^th month running that it had achieved this status. In contrast, price growth over the past 12 months to February was slowest in London, which recorded a figure of 3.2%.

Gráinne Gilmore, Zoopla’s head of research, said: “Buyer demand remains elevated as the trends that emerged during the pandemic among households about where and how they are living, continue to drive the market. Demand is strongest for family houses, indicating a continued appetite for additional internal and external space.”

23 March: Annual House Price Inflation Dips To 9.6% – ONS

• Average house price up 9.6% in year to January
• Average cost of UK home £274,000
• Wales best-performing location 

Average UK house prices rose by 9.6% in the year to January 2022, down from 10% recorded the previous month, according to the latest figures from the Office for National Statistics (ONS).

The ONS puts the price of an average UK home at £274,000 this January, an increase of £24,000 on the same month in 2021.

Wales continues to lead the way in terms of the largest national house price increases, with property prices in the country climbing 13.9% to an average of £206,000 in the year to January 2022.

Scotland saw prices rise by 10.8% to £183,000 over the same period. England registered a 10.4% increase to £292,000, while prices in Northern Ireland climbed by 7.9% to £159,000.

In terms of UK regional performance, the East Midlands recorded the strongest annual growth with prices rising by 11.6% in the year to January. Average prices in London rose by just 2.2% over the same period, the weakest of the UK’s regions.

Nicky Stevenson, managing director at estate agents Fine & Country, said: “A modest tightening in house price growth has been expected for some time with challenges building across the broader economy. Affordability has been stretched by a spike in inflation and the consequential upward pressure on interest rates.”

Nathan Emerson, CEO of housing industry body Propertymark, said: “What these ONS figures suggest is that the cost of living, energy prices and rising interest rates mean buyers are beginning to be more cautious with their cash. 

“Our data shows there are more properties entering the market, bringing signs of an equalisation between supply and demand which will likely have a more stabilising effect on prices in the coming months.”

21 March: Rightmove Sees Average Price Top £350,000

• Average British home worth record-breaking £354,564
• 10.4% annual price growth in March, highest in eight years
• Largest supply/demand mis-match ever 

The price of an average UK home hit a record level this month, according to the latest data from property portal Rightmove.

Rightmove’s house price index shows average asking prices grew by 1.7% month-on-month, or £5,760, to stand at £354,564 in March 2022. Rightmove says prices last rose this steeply in March 2004.

The latest increase contributed to an overall rise in the annual growth rate for average house prices of 10.4% to March 2022, its highest level in nearly eight years.

Rightmove says the growth figures have been stoked by a large imbalance between buyer demand and the number of properties for sale.

It adds that, with more than twice as many buyers as sellers, the property market is entering the spring selling season with the biggest mis-match between supply and demand it had ever measured.

Rightmove says it is too early to know how the property market will be affected by the longer-term economic impact of the war in Ukraine. 

Rightmove director, Tim Bannister, said: “The imbalance between high buyer demand compared to low available property supply is the greatest we have ever seen for the start of a spring market, meaning the chance of being able to pick and choose between several buyers is strong.

“The proportion of properties finding a buyer within the first week is also at an all-time high for this time of year, so sellers with an appropriately priced and well-presented property can expect a shorter marketing period than the norm.”

Kate Eales from estate agent Strutt & Parker said: “The market continues to be competitive, with demand outweighing supply, driving up house prices across the country. But despite historically low stock volumes dominating headlines over the past few weeks, we’re beginning to see incremental increases in the number of homes coming to the market as we enter spring.”

7 March: Average UK Property Price Breaks Record – Halifax

• Average UK property hits record £278,123
• House prices up 10.8% in year to February
• Wales continues to lead regional charge

The average UK house price climbed by 10.8% in the year to February 2022, taking it to a record high of £278,123, according to the latest house price index from Halifax.

The company says average house prices grew by 0.5% in February, the eighth rise in consecutive months making the annual growth rate the strongest in 15 years.

Average property values have risen by 16%, or £38,709, in the two years since February 2020, just before the start of the Covid-19 pandemic.

Halifax says Wales, with annual house price inflation of 13.8%, was the UK’s strongest performing area. It notes that South West of England (13.4%) and Northern Ireland (13.1%) both recorded strong annual gains.

London (5.4%) was the weakest performing area, but Halifax says the annual growth figure was the capital’s highest since the end of 2020.

Russell Galley, Halifax’s managing director, said: “The UK housing market shrugged off a slightly slower start to the year with average property prices rising in February by £1,478 in cash terms. This was the eighth successive month of house price growth, as the resilience which has typified the market throughout the pandemic shows little sign of easing.”

Amanda Aumonier, head of mortgage operations at online mortgage broker Trussle, said: “While today’s news is positive for homeowners, it remains to be seen how long house price growth can continue to climb in the difficult economic climate.

“Interest rate rises, increasing inflation and the spiralling cost of utilities are placing an extreme burden on households. This financial pressure will inevitably impact new and old buyers’ ability to afford property and so we could see a significant decrease in demand in the coming months.”

4 March: Zoopla Hails Record Average Property Price

• Average home worth £244,100
• Average prices up 7.8% in year to January
• Wales again sees highest growth

The average UK house price rose to a record £244,100 in January 2022, according to Zoopla’s latest house price index. Growth hit 7.8% in the 12 months to January this year, down from 8% the previous month.

Zoopla says buyer demand for homes in February 2022 was 70% above the five-year average, while the number of homes for sale was down 43%.

But it adds that, since the start of 2022, new property listings in certain UK regions, including the East Midlands, Yorkshire and the Humber and Scotland have exceeded levels recorded in the three years to 2020, pointing to “a turnaround in supply”.

Wales continues to lead the charge in terms of regional annual house price growth, rising by 11.7% in the year to January 2022, beating all other regions for the eleventh month in a row. Growth was slowest in London, where the figure was 3.1%.

Grainne Gilmore, Zoopla’s head of research, said: “The data indicates that more homes are coming to market, as movers and other owners list their properties for sale. This will create more choice for the many buyers active in the market.

“However, the imbalance between high demand and supply will take much longer to unwind and this will continue to underpin pricing in the coming year.”

Guy Gittins, CEO of estate agents Chestertons, said: “To see new buyer enquiries of this scale at the beginning of the year is truly remarkable and a strong indication for the market to remain buoyant for at least the first half of 2022.”

2 March: Nationwide – Average UK Property Price Hits Record High

• Annual house price growth surges 12.6%
• Typical home worth record £260,230
• Average house price 20% higher than 2020

The price of an average UK house soared to a record level of £260,230 last month, according to the latest data from Nationwide.

The building society said the price of a typical British home surged by 12.6%, a rise in cash terms of £29,162, in the 12 months to February 2022.

The latest house price increase, up 1.7% month-on-month, was the seventh rise in consecutive months. Nationwide said house prices are increasing at their fastest rate since June last year.

It said the continued buoyancy of the housing market was surprising, given the mounting pressure on household budgets caused by rising inflation, currently standing at 5.5%, and in light of increased borrowing costs.  

The Bank of England has raised the bank rate twice since December last year. The figure currently stands at 0.5% with the prospect of another rise in the pipeline, perhaps as soon as this month (the next bank rate decision is due on 17 March).

Robert Gardner, Nationwide’s chief economist, said: “The strength of the housing market is particularly noteworthy since the squeeze on household incomes has led to a significant weakening of consumer confidence.

“The economic outlook is particularly uncertain. It is likely the housing market will slow in the quarters ahead,” he added.

Increasing pressure

Amanda Aumonier at online Trussle – our mortgage broker partner – said: “While it’s good news house price growth remains steady, homeowners are continuing to face increasing pressure on everyday bills. 

“Alongside the overall increase on household bills, the past week has seen petrol and diesel prices rise significantly – something that may hit those saving for potential house deposits.

“As people take stock of their current financial situation and manage the increased cost of living, this could impact the pipeline of homebuyers, decreasing the demand on property and the likelihood of bidding wars which could, together, halt any further growth in house prices.”

Nicky Stevenson, managing director at estate agent Fine & Country, said: “Rocketing energy prices, volatile stock markets and creeping interest rates have yet to make even the smallest dent on turbo-charged house price growth.

“This is a remarkable bull run and the prospect of any house price correction seems rather remote for the time being. Heady gains are likely to continue unless we see a flood of new listings come on to the market.”

21 February: Rightmove Notes Record Prices, Signs Of Busier Market

• Average asking prices in February up a record £7,785 compared to last month
• Increases driven by ‘second steppers’ in search of more space
• Prices nearly £40,000 higher than since the start of the pandemic

The price of property coming to market increased by 2.3% in February, equating to £7,785, according to Rightmove’s latest House Price Index.

The hike marks the biggest monthly jump in pounds the property portal has recorded in its 20 years of data-gathering. It also brings the average asking price of a UK property to a staggering £348,804.

On an annual basis, average asking prices are now 9.5% higher than in February 2021, marking the highest annual rate of growth since September 2014. Prices have risen by nearly £40,000 in the two years since the pandemic started, compared to just over £9,000 in the previous two years.

Market activity is also showing signs of returning, with estate agents reporting a 16% increase in the number of potential buyers making enquiries this month, compared to last year.

London, which has been lagging behind the rest of the UK in terms of price rises, recorded the biggest jump in buyer enquiries at 24% higher than last February.

Tim Bannister, director of property data at Rightmove, said: “As the final legal restrictions look to be ending soon, and more businesses are encouraging a return to the office for at least part of the week, we now have a group of movers who are looking to return closer to major cities, or at least within comfortable commuting distance of their workplaces.”

He added that ‘second steppers’ looking for more space than their first home offers, were also fuelling the market.

Potential sellers are showing more signs of activity, with the number of people requesting a home valuation from an estate agent up 11% compared to this time last year, said Rightmove.

While there is still a mismatch between buyer demand and the supply of home, and added pressures from the rising cost of living, Mr Bannister says that the most recent data shows, “demand rising across the whole of Great Britain, with many people determined to move as we head into the spring home-moving season.”

ONS: House Prices Rise 10.8% In 2021

• UK average house prices rise 10.8% in year to December 2021
• Average UK home in December 2021 costs £275,000 
• London sees weakest annual growth at 5.5%

Average house prices in the UK stood 10.8% higher in December 2021 compared to the previous year. The annual rate of house price inflation was slightly up on the 10.7% recorded in December 2020, according to the latest UK House Price Index (UK HPI) from the Office for National Statistics (ONS).It puts the average cost of a UK home at the end of last year at £275,000 – £27,000 more expensive than the same time in 2020.

Research from Savills shows that this annual increase means that, effectively, ‘houses earned more than people’ last year. According to the 2021 Annual Survey of Hours and Earnings, the average UK worker earned £25,971.

The UK HPI comes on the same day as the latest inflation figures, which show that the cost of living, as measured by the Consumer Prices Index (CPI), rose to 5.5% in January, marking a 30-year high. This is making further rises in the Bank of England base rate more certain which, in turn, is putting upward pressure on the cost of mortgages.

Miles Robinson, head of mortgages at online broker Trussle, said: “While continued house price growth is positive news, many homeowners are concerned about their finances, as soaring inflation and the cost of energy are putting households under extreme pressure.”

Prices by UK country 

In regional terms, Wales led the charge with house prices increasing by an average 13% over the year to December, a whisker under the 12.6% recorded in November. It puts the average cost of a home in Wales at £205,000.

In Scotland, property prices increased by 11.2% over the year to December putting the cost of an average home at £180,000. The rate of growth in Scotland slowed from 12.1% in the year to November 2021.

England was the next-best performing region with annual house price increases of 10.7%, slightly up from 10.5% in the year to November last year. The average cost of a home in England stands at £293,000. However, London continued to see weakest annual growth at 5.5%.

Northern Ireland continues to be the cheapest country in the UK for buying a home, where property values (at the end of the third quarter of 2021 which is most recent data), stand at an average £159,000. It marks a 10.7% increase on the previous year.

However, because the UK House Price Index (HPI) uses data from completed transactions, from HM Land Registry and the respective country equivalents, the ONS said there may be ‘increased volatility’ in the latest estimates, especially where transaction numbers have been low.

7 February: Halifax: House Prices Continue Upward – But Rate Of Growth Slowing

• Annual house price growth steady at 9.7%
• Monthly house price growth slows to 0.3%
• Average UK house prices stand at £276,759

Property prices in January continued to rise, but the rate of growth is slowing according to the latest house price index from Halifax. It reports that, while average values are 9.7% up on this time last year, the monthly growth stands at 0.3% – the slowest recorded since June 2021.

Affordability remains at historically low levels as house price rises continue to outstrip earnings growth, according to Russell Galley, managing director at Halifax: He said: “Despite record levels of first-time buyers stepping onto the ladder last year, younger generations still face significant barriers to home ownership as deposit requirements remain challenging.”

He added that the challenges of getting onto the property ladder are likely to become even more acute in the short-term as household budgets come under mounting pressure. 

Energy costs are set to soar from 1 April, for example, following a 54% rise in the price cap, while the cost of mortgages is also climbing after two interest rate hikes in the last three months by the Bank of England. It has put the current base rate at 0.5% with city economists forecasting at least two more rises by the end of the year.

This is on the back of an already-soaring UK inflation rate which, as measured by the Consumer Prices Index, jumped to 5.5% in the 12 months to January 2022 – its highest level in 30 years. 

The relentless rise of property prices is being exacerbated by the current lack of available stock. According to Nathan Emerson, chief executive of estate agent trade body, Propertymark, the number of homes for sale is between 40% and 50% down on last year.

He said: “Our member agents are reporting that the number of offers they are receiving on properties each month can be well into double figures and that sales are continuing to be agreed at over the asking price.”

More homes will need to become available for sale before prices can slow, he added.

Wales continues to be the strongest-performing UK region. With annual house price inflation of 13.9% in January and an average property value of £205,253.

Northern Ireland and Scotland also continue to record strong price growth, with prices up 10.2% and 8.9%, on this time last year respectively. 

In England, the North West was once again the strongest performing region, up 12% compared to last January, while London remains the weakest performing region with annual price growth of 4.5%.

3 February: Bank Of England Raises Rate To 0.5%

The Bank of England (BoE) today raised its Bank interest rate to 0.5%, the second increase in two months.

The announcement, the first back-to-back interest rate rise since 2004, will see the cost of lending rise, including an automatic increase in tracker mortgage rates. The news also means dearer home loans for customers with standard variable rate mortgages, if their lenders choose to pass on the increase.

Today’s decision will further intensify the squeeze on household finances, following a 54% increase in the energy price cap to £1,971 from this April, announced by the energy regulator Ofgem earlier this morning.

The BoE’s Monetary Policy Committee (MPC) voted 5-4 to double the rate from its previous level of 0.25%. The BoE said that those MPC members in the minority had called for a rate rise of 0.5 percentage points to 0.75%.

The latest inflation figure, reported last month, showed that the cost of living grew by 5.4% in the 12 months to December 2021, its highest level in 30 years. Inflation is almost three times the BoE’s 2% target, as set by the government.

The MPC’s decision to dampen down the UK’s overheating economy by increasing interest rates had been predicted by most City commentators.

The MPC voted unanimously not to reinvest any of the £875 billion of government bonds it has bought under quantitative easing programmes when they mature.

Online mortgage broker, Trussle, calculated that the latest rate rise could add a further £331.56 to the average mortgage annually for customers whose home loans are based on standard variable rates. 

This is based on the average house price of £264,000 and assuming a 15% deposit. The calculation comes on top of the £324.48pa increase customers faced following December’s rate rise last year.

The next Bank rate announcement is due on 17 March. A further two rate increases are thought to be in the pipeline for 2022.

Demand Surges As Home Buyers Flood Back To Cities

Home buyers are flocking to city centre locations in numbers not seen since before the pandemic struck in 2020, according to online mortgage broker Trussle.

The broker says that, after a two-year break, there are clear signs that prospective property buyers are showing a rediscovered desire for city living.

Enthusiasm for cities declined during the pandemic as remote working became the norm and local amenities were closed. 

But Trussle says demand for mortgages in London, Manchester and Birmingham is rising. Mortgage applications in London now account for 14% of all mortgage applications, a level last seen in December 2019.

The broker says mortgage applications in the capital have increased by 30% in recent months and adds that Manchester and Birmingham are proving even more popular as potential home buying destinations. In Manchester, applications are double where they were in 2019.

According to Trussle, buyers with an appetite for a return to city living want more space than previously, to take into account the potential to work from home.

Miles Robinson, the broker’s head of mortgages, said: “With high streets back in business, the allure of city living is returning. This is clearly beginning to resonate with buyers. We are seeing interest in city centre properties up and down the UK either return to pre-pandemic levels, or move higher.”

Nationwide: Average UK Property Price Hits Record High

• Annual house price growth surges to 11.2%
• Typical home worth record £255,556
• Housing market’s strongest start to year since 2005

The price of an average UK house hit a record level of £255,556 last month, according to the latest data from Nationwide building society.

It says the price of a typical British home surged by 11.2% in the 12 months to January 2022, up 0.8% month-on-month.

The latest price rise was the sixth in consecutive months. Nationwide says the increase means the UK’s housing market has made its strongest start to the year since 2005.

The building society adds that the total number of property transactions in 2021 was the highest since 2007 and around 25% higher than in 2019, before the pandemic struck.

Robert Gardner, Nationwide’s chief economist, said: “Housing demand has remained robust. Mortgage approvals for house purchase have continued to slightly run above pre-pandemic levels, despite the surge in activity in 2021 as a result of the stamp duty holiday, which encouraged buyers to bring forward their transactions to avoid additional tax.”

Nicky Stevenson, managing director at estate agents Fine & Country, said: “While monetary policy will tighten in 2022, this is unlikely to have a significant damping effect on the housing market any time soon, with most agents around the country still unable to find enough homes to meet demand.”

Rightmove: Seaside Town Is UK’s Housing Supply Hotspot

• Bexhill-on-Sea has most new properties for sale this year compared with 2021
• UK has 8% more properties for sale overall compared with 12 months ago
• Nuneaton in Warwickshire is fastest town for finding a buyer

A town on the English south coast and an area in the Derbyshire Peak District have topped a list of locations that have more new properties for sale this January, compared with the same time in 2021.

Bexhill-on-Sea led the new year list of ‘supply hotspots’ with an 88% increase in the number of new properties coming to market, according to the property website Rightmove.

The East Sussex town was followed by High Peak in Derbyshire, which recorded an 82% rise in new homes for sale. Chelmsford in Essex was third with a 58% increase.

Rightmove said that, regionally, the East Midlands, South East, South West, Wales and Yorkshire & Humber each recorded a rise of 10% or more in new properties for sale this January compared with the same month last year.

The company added that, as a whole, there were 8% more new properties for sale across the UK in the last week of January 2022, compared with the same time in 2021.

In terms of finding buyers, Rightmove said that Nuneaton in Warwickshire had the quickest turnaround time of 24 days. This was followed by Leigh-on-Sea in Essex and Burton-on-Trent in Staffordshire, with 27 and 29 days respectively.

Tim Bannister, Rightmove’s director of property data, said: “More new listings, coupled with the higher number of requests from prospective sellers to estate agents to value their home, certainly suggests good news and positive signs that we are moving towards a better balanced market in 2022.”

Zoopla: Average UK Property Price Hits Record Level

·      Average British home worth record-breaking £242,000
·      Housing demand up 50% compared with recent New Year periods
·      Highest regional price growth in Wales for tenth month running 

The average UK house price rose to a record £242,000 in December 2021, according to Zoopla’s house price index, out today.

The property portal says house price growth was 7.4% in the 12 months to December, and that the price of an average house has risen by £25,500 over the past two years.

It says UK housing demand in January is up by 50% compared with recent New Year periods. 

Wales recorded the highest regional annual rate of house price growth for the tenth month in a row, up 11.3% to December. Bringing up the rear was London with growth of 2.6% over the same 12-month period.

Zoopla says that, with ‘hybrid’ working from home and the office continuing to be the norm for many white-collar workers, the pandemic continues to shape the property market. 

It added that the trend for increasing space has further to run, notably for three-bedroom houses outside the London area. Demand for this type of property is four times higher than the five-year average.

Geographically, Zoopla says suburbs remain in the highest demand with Thurrock in Essex and areas around Birmingham, Glasgow and East London proving the most popular.

With city workers slowly returning to offices, the property portal added that demand for flats is at its highest level for five years.

Grainne Gilmore, Zoopla’s head of research, said: “The effects of the pandemic on the housing market cannot be underestimated. Even after nearly two years, the pandemic-led ‘search for space’ is one of the factors creating record demand for homes this month.

“The market is also being boosted by office-based workers re-thinking where and how they are living amid more hybrid working models.”

Rents increase at fastest rate on record

Average asking rents have increased at the fastest rate on record, according to Righmove, the property website.

The company said that average rents are now £1,068 per calendar month (pcm) outside of London, 9.9% higher than this time last January.

Rightmove noted that rents in London have risen beyond pre-pandemic levels for the first time and now stand at a record average figure of £2,142pcm.

ONS: Annual House Price Inflation Hits 10% 

• Average UK house prices up 10% in year to November 2021
• Average cost of UK home at £271,000
• Wales best-performing location with annual price growth of 12.1%

Average UK house prices soared by 10% in the year to November 2021, according to the latest figures from the Office for National Statistics (ONS). 

The ONS said that the latest annual growth figure was a slight increase on the 9.8% recorded a month earlier in October. 

The cost of an average home in the UK stood at £271,000 last November, an increase of £25,000 compared with the figure from 12 months earlier.

Wales led the way in terms of the biggest national house price increases around the UK. Average property prices in the country climbed by 12.1% to an average of £200,000 during the 12 months to November last year.

Next came Scotland where prices climbed by 11.4% to an average £183,000. Northern Ireland saw a 10.7% rise to £159,000, while prices in England climbed by 9.8% to £288,000.

In terms of regional performance, the south west of England recorded the strongest annual house price growth with a figure of 12.9%. London recorded the lowest figure with average prices up 5.1% in the year to November 2021.

Miles Robinson, head of mortgages at online broker Trussle, said that it was good news for homeowners that house price growth remained steady, but that there was also the need for caution: “Many homeowners are now facing a real squeeze on their finances. Increased interest rates have already had a big impact on mortgages, with sub 1% mortgage rates all but disappearing from the market overnight.

“In addition to this, rising energy costs look set to affect mortgage affordability. Big lenders have signalled that energy prices could increase by such an extent that they will need to take utility costs into account during mortgage affordability checks.

“Not only could this prohibit first time buyers with smaller deposit sizes, but it could also ring fence more competitive mortgage deals for those who really need them. Time will tell what impact these changes will have on the housing market, but it’s likely that buyers will need to take a more cautious approach during the coming months.”

Rightmove: UK Property Prices Hit Highest Annual Growth Rate For Six Years   

• Average UK property prices grow at fastest rate since May 2016
• Average asking price at £341,019 in January 2022
• First-time buyer prices hit record £214,176

Average UK property prices grew at their fastest annual rate for nearly six years this January, according to the latest data from Rightmove.

The property portal’s house price index showed that average asking prices grew by 0.3% month-on-month, to stand at £341,019 in January 2022. 

This contributed to a 7.6% rise in the overall annual growth rate for average house prices to January. Rightmove said the last time this figure was exceeded was when it reached 8.3% in May 2016.

The company added that first-time buyer asking prices reached a record level of £214,176 in January this year, a month-on-month increase of 1.4%.

According to Rightmove, the number of homes for sale per estate agency branch hit a record low of 12 properties in January, down two from the previous month. 

Available homes continue to be snapped up at speed. The company said the average time to find a buyer in December 2021 was more than two weeks quicker than in the same month the previous year.

Tim Bannister, Rightmove’s director of property data, said: “New Year sellers and buyers have been quick off the mark this year, with Rightmove recording the highest ever number of Boxing Day sellers coming to market. Early-bird sellers who got themselves ready to come to market are now benefiting from the busiest start to the new year we’ve ever recorded.”

7 January: Halifax: Average UK Property Price Breaks Record

• Average cost of UK property hits record high of £276,091
• December 2021 prices 9.8% higher than 12 months ago
• Wales continues to lead with 14.5% annual house price inflation

Average UK house prices climbed by 1.1% in December 2021 compared with the previous month, taking them to a record high of £276,091, according to the latest House Price Index from Halifax.

The company said this was the sixth consecutive month where UK house prices have risen.

Annual house price inflation stood at 9.8% in December, its highest level for 14 years. The rise meant that average property prices were £24,500 higher at the end of 2021 compared with a year earlier. 

Halifax said that Wales, with annual house price inflation of 14.5%, was the UK’s strongest performing nation or region. Other double-digit performers included Northern Ireland (10.6%) and the North West (11.8%), making the latter England’s strongest-performing region. 

Russell Galley, Halifax’s managing director, said: “The housing market defied expectations in 2021. We saw the average house price reach new record highs on eight occasions, despite the UK being subject to lockdown for much of the first six months of the year.

“Looking ahead, the prospect that interest rates may rise further this year to tackle rising inflation and increasing pressures on household budgets suggest house price growth will slow considerably.”

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “The housing market is continuing to defy the odds. But, while it’s good news for homeowners that house price growth remains steady, there is need for caution. This winter is likely to see a cost-of-living squeeze that will impact savings and which could hamper potential market growth.

He suggested fixing mortgage payments could be advantageous: “For homeowners, locking your monthly payments for a period of time can save money and help households better plan for the future.”

30 December: Nationwide: Average UK Property Price Hits Record

• Typical British home surges to record high £254,822 
• Annual house price growth at 10.4% in December
• 2021 strongest year for property prices since 2006
• Wales top performing region in past 12 months

The price of an average UK home hit a record level of £254,822 this month, according to the latest data from Nationwide building society.

It has reported that the price of a typical British home rose by 10.4% in the 12 months to December 2021, an increase of nearly £24,000 over the past year. 

Nationwide said that this made 2021 the strongest calendar year for UK house price growth since 2006.

With its house prices up 15.8% year-on-year, Wales ended 2021 as the top performing region. Nationwide started producing regional data nearly 50 years ago and said this was the first time Wales had come out on top during this period.

Northern Ireland recorded annual price growth of 12.1%, while Scotland, with 10.1%, was in line with the average UK figure.

The South-West was the strongest performing English region, with annual growth of 11.5%. Nationwide said London, which recorded a figure of 4.1%, was the weakest performing region in the UK.

London was also the only region to experience lower annual price growth this year compared with 2020, when it recorded a figure of 6.2%.

Sustained demand

Robert Gardner, Nationwide’s chief economist, said: “Demand has remained strong in recent months, despite the end of the stamp duty holiday at the end of September. The stock of homes on the market has remained extremely low throughout the year, which has contributed to the robust pace of price growth.”

Mr Gardener predicted that the UK housing market is likely to slow next year. “The stamp duty holiday encouraged many to bring forward their house purchase in order to avoid additional tax. The Omicron variant could reinforce the slowdown if it leads to a weaker labour market.

“Even if wider economic conditions remain resilient, higher interest rates are likely to exert a cooling influence. Indeed, house price growth has outpaced income growth by a significant margin over the past 18 months and, as a result, housing affordability is already less favourable than before the pandemic struck.

“However, the outlook remains extremely uncertain. The strength of the market surprised in 2021 and could do so again in the year ahead.”

Zoopla: Average UK Property Price Hits Record Level

• Average British home worth a record-breaking £240,800
• UK housing stock valued at £9.5 trillion
• Regional buyer demand currently highest in the East and West Midlands

The average UK house price rose to a record level in November 2021, having increased by £16,000 over the past year, according to Zoopla.

The property portal said annual house price growth stood at 7.1% for the 12 months to November, making the average home worth £240,8000. It estimated around a fifth of the UK’s private housing stock increased by more than £35,000 over the past year.

The company said an increase in the buying and selling of homes this year has resulted in the value of UK housing rising by £670 billion to £9.5 trillion. It added that more people moved into a new property in June than in any other month since 2005, when records began for this data.

Zoopla said buyer demand shaped the UK property market in 2021, with levels running on average nearly 16% higher than last year. Levels are currently running highest in the East Midlands, West Midlands and Yorkshire where the figures are up by 42%, 35% and 28% respectively on 2020.

Grainne Gilmore, Zoopla’s head of research, said: “This year has been a record year for the market, with the stamp duty holiday and the pandemic-led ‘search for space’ among homeowners resulting in the highest number of sales since before the financial crisis.

“However, such a busy market eroded the number of homes available to buy, as properties were being snapped up so quickly. This imbalance between demand and supply has put upwards pressure on prices. This uplift in equity may act as a spur for more households to consider a move in 2022.”

• The UK’s property price hotspot is Mountain Ash, in Rhondda Cynon Taf in Wales, where average asking prices in the area jumped by 31% over the year, according to the property website Rightmove.

Rightmove said the average asking price for a home in Mountain Ash is £137,200 this year, compared with £104,431 12 months ago.

Rightmove added that, with an increase of 10.5%, Wales tops the tables as this year’s regional property price hotspot. This was followed by the South West and South East of England at 9.6% and 9.1% respectively.

Bank Of England Raises Interest Rates To 0.25%

The Bank of England (BoE) has raised UK interest rates to 0.25%, following yesterday’s sharp rise in the inflation figure and against a backdrop of a surge in the Covid-19 Omicron variant.

This will see tracker mortgage rates increase. The news will also mean dearer mortgages for customers with standard variable rate home loans if their lenders choose to pass on the increase. 

At its last rate-setting meeting of 2021, the central bank’s Monetary Policy Committee (MPC) voted 8-1 to raise the rate from its historic low of 0.1% by 0.15 percentage points. The rise is the first increase in more than three years.

Speculation had been rife earlier this autumn that the BoE would hike interest rates before the year-end to head off an upward trajectory in the UK’s inflation rate. 

The latest inflation figure, reported on 15 December, showed that the cost of living grew by 5.1% in the 12 months to November, its highest level in over 10 years. Inflation now stands at well over double the BoE’s 2% target level, as set by the government. 

Taken by surprise

The MPC’s decision to dampen down the UK’s overheating economy took many City commentators by surprise.

The BoE said: “The labour market is tight and has continued to tighten, and there are some signs of greater persistence in domestic cost and price pressures.” 

It added that: “Although the Omicron variant is likely to weigh on near-term activity, its impact on medium-term inflationary pressure is unclear at this stage.”

Hinesh Patel, portfolio manager at Quilter Investors, said: “The BoE clearly feels vindicated to raise interest rates just before Christmas. Given high, and rising, inflation, in part a result of the BoE’s communication mis-steps creating a de-facto weaker sterling policy, it clearly felt it could no longer stay on the accelerator pedal despite the risks that are now out there in the economy.”

Nicky Stevenson, managing director at estate agents Fine & Country, said: “After wrong-footing the markets last month, rate-setters have decided that further inaction risked fuelling inflation and jeopardising the economic recovery.

“Such a minor increase isn’t going to impact the property market significantly. Currently, more than three-quarters of homeowners are locked into fixed rate deals, so will be unaffected for the time being,” she added.

The next Bank of England rate announcement is due on 3 February 2022.

ONS: UK House Price Inflation Slows To 10.2%

• Annual rate of house price inflation at 10.2% in October
• Average cost of a UK home at £268,000 
• London shows slowest annual growth at 6.2%

Property values in October were more than 10.2% higher than the same month a year ago,  according to figures from the Office For National Statistics (ONS). 

The annual rate of inflation slowed from 12.3% in the year to September, and reflects the first month there has not been a stamp duty incentive in any part of the UK. However, property values were still £24,000 more expensive on average than in October 2020.

Wales saw the steepest increase with average property values 15.5% up on last year at £203,000. In Scotland, prices rose by 11.3% over the year to reach an average £181,000. 

Property values in Northern Ireland saw the next steepest annual increase at 10.7% putting the average cost of a home at £159,000, while England saw the slowest UK growth at 9.8%. Property in England is still the most expensive however, at an average £285,000. 

London saw the slowest growth at 6.2%.

However, the housing market is looking less certain for 2022, according to Miles Robinson, head of mortgages at online broker Trussle, in the face of ‘a difficult winter for household finances in general’.

He said: “Families are facing a steep rise in energy bills and an increase in the general cost of living. This squeeze in consumer spending will almost certainly impact people’s ability to save for deposits and ultimately move home.  As such, we could well see house price growth begin to stall.”

Separate figures published by the ONS today show that the annual rate of inflation, as measured by the Consumer Prices Index, has also risen to 5.1%. This is more than double the Bank of England’s target of 2% and marks the highest level in the last decade. 

Soaring inflation has been largely driven by the rising cost of fuel, as well as food, clothing and household energy bills. It also increases the likelihood of the Bank of England putting up interest rates when it announces its latest decision tomorrow.

Robinson at Trussle added: “While it may seem small, an interest rate rise of just 0.25%, which is a likely scenario, could add £324.48 onto the average mortgage per year.”

14 Dec: Bank Of England Mulls Removing Mortgage Affordability Test

• UK’s central bank to consult on scrapping mortgage eligibility stress test
• Relaxation of rules would potentially benefits thousands of first-time buyers

The Bank of England (BoE) is to consult next year on the suitability of the UK’s existing mortgage affordability tests.

Stringent lending rules were imposed on borrowers seven years ago, in the wake of the 2008 financial crisis, to prevent a potential property crash from damaging the UK economy.

The rules restricted the number of mortgages that banks could offer at high loan-to-income ratios. In effect, these limited most home loans to no more than 4.5 times a potential customer’s income (or joint income in the case of combined mortgage applications).

At the same time, affordability checks were also introduced designed to stop customers from building up excessive debt. This meant that would-be borrowers had to be able to show that they could still afford their mortgage repayments if interest rates rose by three percentage points.

Latest analysis from the BoE shows that mortgage debt to income has stabilised since the measures were brought in, suggesting that the restrictions protect against an increase in household indebtedness.

As a result, the BoE has revealed that it is now considering removing the affordability stress test element of the mortgage application procedure. It said it will set out a consultation on reforming the existing lending rules early in 2022. 

BoE governor, Andrew Bailey, said that dispensing with the affordability requirement should not be thought of as a relaxation of lending standards because the 4.5x income rule was the main filter against riskier lending. 

According to officials, removing the affordability test would make the overall rules  “simpler and more predictable”.

Miles Robinson, Head of Mortgages at online mortgage broker Trussle, comments: “There have been reports that the BOE may be imminently about to change lending rules, making it easier for borrowers to take out larger loans. Many lenders will currently only allow buyers to borrow approximately 4.5 times their salary. But, this could be extended to 6-7 times their yearly earnings.”

“These changes should be approached with an air of caution. The rules are in place to protect homeowners from any volatility that can come from interest rate rises. However, soaring house prices mean that younger buyers on average have to save for 10 years to secure the large deposits that are typically needed to access the housing market. As such, relaxing the rules just slightly could enable hundreds of thousands of first time buyers to own their own home much more quickly.”

13 Dec: Rightmove Reports Further House Price Falls Amid Near-Record Lending In 2021

• Average UK asking price stood at £340,167 in December, down 0.7% month-on month
• 2021 saw highest number of home sales for 14 years
• Amount of fully available housing stock for sale hit record low in December

Average UK property prices fell by 0.7% in December 2021, the second slight dip in consecutive months according to the latest data from Rightmove.

The property portal’s house price index showed that the average asking price of properties coming to market stood at £340,167 this month. This was £2,234 lower than November’s average, which itself was 0.6% down compared with the figure recorded a month earlier.

Rightmove attributed December’s dip to seasonal factors, adding that average house prices over the past 12 months had risen by 6.3%

With two months of sales data yet to be reported, Rightmove said 2021 had already recorded the highest number of completed home sales since 2007. It predicted that the total figure for this year will be around 1.5 million.

According to Rightmove, the amount of fully available housing stock for sale hit a record low in December. The portal added that valuation requests were up 19% on the same time a year ago, suggesting more people will be making a new year resolution to move.

Around the regions, average property prices in the West Midlands performed best by bucking December’s decline and recording a rise of 1.6% during the month. In contrast, average prices for Scotland fell 3.5% in the same period.

Tim Bannister, Rightmove’s director of property data, said: “While the pandemic is still having an ever-changing impact on society as we head into the new year, we expect a housing market moving closer to normal during the course of 2022. A return to a less frenetic market due to more choice, and forecast slightly higher interest rates, will suit many movers who have held back during the last 18 hectic months.”

Rightmove’s forecast ties in with that from trade association UK Finance, also published today. It suggests that, while an estimated £316bn in mortgage lending has been advanced by banks and building societies in 2021 (up 31% on 2020 and the highest since before the global financial crisis in 2007), lending will ‘moderate’ in 2022 to £281bn due to factors such as the end of the stamp duty holiday. 

However, UK Finance forecasts that gross mortgage lending will increase again to £313bn in 2023 due, in part, to a post-pandemic resurgence in homemover numbers. 

7 December: Halifax: House Prices Continue On Relentless Upward Climb In November

• Average cost of UK property hits a new record high of £272,992
• Prices in November 8.2% higher than 12 months ago
• Wales leads the charge with 14.8% annual house price inflation, and cost of average home breaking £200,000  

UK house prices climbed by 1% in November compared to the previous month, according to the latest House Price Index from Halifax, reaching a new high of £272,992.

It marks the fifth consecutive month that average house prices have risen, with typical values more than £20,000 higher than last year. Prices have risen by £33,816 (or £1,691 a month) since the first lockdown in March 2020, and stand £13,000 higher the summer (June). 

While first-time buyer properties were priced 9.1% higher in November than 12 months ago (compared to 8.8% for homemovers), annual gains (at 6.6%) were slower for detached properties. This could suggest the ‘race for space’ is becoming less prominent than earlier in the pandemic, according to Russell Galley, managing director at Halifax.

He said that, overall, the buoyant market continues to be driven by a shortage of properties, a strong labour market, and competition among mortgage lenders to produce the best deals amid the continued low-interest rate environment.

Regional breakdown

Wales remains the strongest performing region by far for UK house prices, with annual house price inflation of 14.8%. The value of the average Welsh property also broke the £200,000 barrier for the first time in history in November, at £204,148. 

Northern Ireland continued to post double-digit annual growth at 10%, with an average house price of £169,348.

House prices also continued to rise in Scotland, with the average property now costing 8.5% more than last year at a current £191,140. Again, this is the most expensive on record. 

While up on October’s figure, London continues to lag behind the rest of the UK posting annual inflation of just 1.1%. However, at average house prices of £521,129, the capital is still by far the most expensive area of the UK.

Tougher times ahead

However, Halifax does not expect the current level of house price growth to continue into 2022, given that ‘house price to income ratios are already historically high, and household budgets are only likely to come under greater pressure in the coming months’.

Mr Galley said: “Looking ahead, there is now greater uncertainty than has been the case for quite some time, with interest rates expected to rise to guard against further increases in inflation.

“Economic confidence may also be dented by the emergence of the new Omicron virus variant, though it remains far too early to speculate on any long-term impact, given insufficient data at this stage, not to mention the resilience the housing market has already shown in challenging circumstances.”

Miles Robinson, head of mortgages at online broker Trussle agreed that, while it’s positive that house prices and demand remain strong as 2021 comes to a close, caution should be exercised as we enter what looks to be a ‘difficult winter for household finances’.

He said: “Families are facing a steep rise in energy bills and an increase in the general cost of living. People’s thoughts are also beginning to turn towards a possible rise in interest at the end of this year.

“While it may seem small, an interest rate rise of just 0.25%, which is a likely scenario, could add £324.48 onto the average mortgage each year. As such, now is a good time for people to start looking at their outgoings, and mortgages are the perfect place to start.”

1 December: Nationwide Sees House Prices Edge Higher, Cites Uncertain Outlook

• Annual house price growth 10.0%, up from 9.9% in October.
• Seasonally adjusted prices up 0.9% month-on-month
• House prices 15% above March 2020 levels

Nationwide, the world’s largest building society, has recorded double-digit annual house price growth for November in its latest House Price Index, out today.

It logged a 10.0% rise, a wafer higher than the 9.9% it recorded in October. 

Prices rose 0.9% month-on-month once seasonal effects were discounted. It says house prices are now almost 15% above the level prevailing in March last year, when the pandemic struck the UK and the housing market was locked down for two months.

Robert Gardner, the society’s chief economist, says the impact of the Omicron strain of coronavirus is uncertain: “A number of factors suggest the pace of activity may slow. It is unclear what impact the new variant will have on the wider economy. 

“While consumer confidence stabilised in November, sentiment remains well below the levels seen during the summer, partly as a result of a sharp increase in the cost of living. Moreover, inflation is set to rise further, probably towards 5% in the coming quarters.

“Even if economic conditions continue to improve, rising interest rates may exert a cooling influence on the market. House price growth has been outpacing income growth by a significant margin and, as a result, housing affordability is already less favourable than was the case before the pandemic struck.”

The Bank of England will announce on December 16 whether it will increase the Bank rate, which heavily influences mortgage borrowing rates, from its current historic low of 0.1%.

The Bank wrong-footed the market in November by holding the Bank rate steady, which prompted many market watchers to predict that the Monetary Policy Committee would back a rate rise later this month. But with the economic impact of Omicron uncertain, forecasters are now on less solid ground.

On Monday, the Bank said mortgage borrowing in October had fallen to its lowest level since July (see story below).

Mr Gardner said there have already been some signs of cooling in housing market activity in recent months: “The number of housing transactions were down almost 30% year-on-year in October. But this was almost inevitable, given the expiry of the Stamp Duty holiday at the end of September, which gave buyers a strong incentive to bring forward their purchase to avoid additional tax.”

Any negative sentiment plays against the buoyancy the market has exhibited thus far in 2021. Mr Gardner added: “The number of housing transactions so far this year has already exceeded the number recorded in 2020, with two months (of data) still to go. We are tracking close to the number seen at the same stage in 2007, before the global financial crisis struck.”

Nationwide says underlying housing market activity appears to be holding up well, with the number of mortgages approved for house purchases in October running above the 2019 monthly average. 

It says early indications suggest labour market conditions remain robust, despite the furlough scheme finishing at the end of September.

Miles Robinson at our online mortgage partner Trussle, commented on the Index: “While it’s positive that house prices remain strong, we must face up to what looks to be a difficult winter for household finances. Families are facing a steep rise in energy bills, as well as an increase in the general cost of living.

“People’s thoughts are beginning to turn towards a possible rise in interest rates at the end of this year. While it may seem small, an interest rate rise of just 0.25%, which is a likely scenario, could add £324.48 onto the average mortgage per year*. As such, now is a good time for people to start looking at their outgoings, and mortgages are the perfect place to start.

“Most homeowners have one, but many don’t understand just how much they could be overpaying by not having the right product for them. You could potentially save thousands of pounds per year by switching.”

* Trussle quotes a monthly repayment amount of £921.91 for a £224,400 mortgage with an interest rate of 1.73%. If the interest rate rose by 0.25 percentage points to 1.98%, the monthly repayment would be £948.95, an increase of £27.04, or £324.48 a year.

29 November: Mortgage Borrowing Plummets In Wake Of Stamp Duty Change

• Mortgage borrowing stood at £1.6 billion in October, the lowest since July 2021
• Mortgage approvals for house purchase fell to 67,200 in October from 71,900 in September

Figures out today from the Bank of England show a steep decline in mortgage borrowing in October to £1.6bn. This compares to £9.3bn in September and is the lowest since last July, when a net amount of £2.2bn of mortgage debt was repaid.

According to the Bank, October’s decrease was driven by borrowing being brought forward to September to take advantage of stamp duty land tax relief before it completely tapered off in England at the end of the month.

Approvals for house purchases fell to 67,200 in October, from 71,900 in September. This is the lowest since June 2020, and is close to the 12-month average up to February 2020, before the onset of coronavirus lockdowns. of 66,700. 

The Bank sees approvals as an indicator of future borrowing, suggesting that the market is cooling following the end of the stamp duty holidays in the UK, although other economic factors may be at play given rising inflation and the prospect for higher interest rates as early as next month.

Approvals for remortgaging rose slightly to 41,600 in October (the Bank’s data only captures those remortgaging with a new lender). This is the highest since March 2020, when it stood at 42,700, although it is well down on the 12-month average up to February 2020 of 49,100.

Distortive effect

Commenting on the figures, Lucian Cook, head of residential research at estate agent Savills, said: “There is no great surprise to see a fall in the number of mortgage approvals in October given the distortive effect of the end stamp duty stamp duty holiday in September.   

“In the year to the end of September, we saw total spend in the UK housing market exceed £500bn for the first time ever to £513bn. This represents an increase of £170bn on pre-pandemic levels, a reflection of three key factors: the so-called race for space as people looked to trade up the housing ladder, the cheap cost of mortgage finance, and the added impetus provided by the stamp duty holiday. 

“Activity in the more expensive price brackets continues to hold up strongly, so we expect to see a higher than normal spend in 2022. That said, it’s difficult to see how spending next year can match the extraordinary levels of late across the market as a whole without such a mix of strong drivers.  

“This supports our expectation that house price growth will slow to 3.5% next year.”

23 November: HMRC sees October property transactions October halve on September

• Provisional number of UK property sales in October 52% lower than September
• Large drop-off is due to ‘forestalling’ as buyers rush to meet the end of stamp duty holiday deadline
• Property transactions 28.2% under mid-lockdown levels recorded in October 2020

The provisional number of residential property transactions (seasonally adjusted) in October 2021 stood at 76,930, which is a staggering 52% less than September, and 28.2% lower than October last year.

The new figures are according to HMRC’s latest monthly data which estimates property transactions on homes worth over £40,000 (where stamp duty usually becomes payable).

The large drop in transactions is due to the end of the stamp duty holiday (a temporary increase in the nil rate band) which, in England and Northern Ireland, fell at the end of September. In Scotland and Wales, the end of the equivalent property tax breaks ended on 31 March 2021 and 30 June 2021 respectively.

Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “The monthly drop looks spectacular, as sales almost halved, but this was from an enormous peak, created by the final stamp duty holiday deadline. A major chunk of sales we would otherwise have expected this winter, were rushed through in time for the deadline at the end of September.

Paul Stockwell, chief commercial officer at Gatehouse Bank, added: “Transactions plummeted similarly after June’s stamp duty deadline, so it’s not surprising to see them fall in this way again. With the tax incentive now completely removed, we’ll see the back of these peaks and troughs as transactions settle into a more consistent pattern. House sales will likely return to the historic norms seen before the pandemic as the cost of moving becomes a factor again.” 

17 November: House price inflation edges 12%, average value £270,000

• UK average house prices increased by 11.8% over the year to September 2021, up from 10.2% in August
• Average UK house price was at a record high of £270,000 in September 2021, which is £28,000 higher than this time last year
• Average house prices increased over the year in England to £288,000 (11.5%), in Wales to £196,000 (15.4%), in Scotland to £180,000 (12.3%) and in Northern Ireland to £159,000 (10.7%)
• London continues to be the region with the lowest annual growth (2.8%) for the tenth consecutive month

Figures out today from the Office for National Statistics reveal that average UK house prices soared by 11.8% in the year to September, with demand fuelled by the end of the tapered Stamp Duty holiday in England. Until 30 September, the nil rate band stood at £250,000. It reverted to £125,000 on 1 October.

The UK average house price for September 2021 was a record high of £270,000, up from £263,000 in August 2021 and £242,000 a year previously. September’s figure is £6,000 higher than the previous record seen in June 2021.

Miles Robinson at Trussle, our online mortgage partner, commented on the latest figures, published on the same day the ONS revealed that the cost of living rose by 4.2% in October: “The Stamp Duty holiday incentivised buyers to accelerate their moving plans in order to save up to £15,000 in costs. As such, house price growth leading up to September was incredibly strong. 

“But, while the market remained buoyant because of this, the months ahead will likely be more difficult as buyers may start to view the market with caution. We have already seen the much publicised sub-1% mortgage deals begin to disappear, and a rise in interest rates is certainly on the cards.

“Alongside this, it looks set to be a difficult winter for household finances. Families are facing a steep rise in energy bills and an increase in the general cost of living. This squeeze in consumer spending will almost certainly impact people’s ability to save for deposits and ultimately move home. But, for those staying put, now could be a good time to remortgage, as rates remain competitive.”

According to the ONS, all UK nations experienced strong price growth in the year to September, with the average prices/percentage increases as follows:

• England – £288,000 / 11.5%
• Wales – £196,000 / 15.4%
• Scotland – £180,000 / 12.3%
• Northern Ireland – £159,000 / 10.7%.

London continues to be the region with the lowest annual house price growth in September at 2.8%, down from 6.7% in August 2021. This represents the lowest annual growth in London since July 2020. However, the capital’s average house price remains the most expensive of any region in the UK at £507,000.

The North East of England continued to have the lowest average house price, at £153,000.

15 November: Rightmove – ‘Full house’ as October prices hit record levels across all regions and buyer types in the same month

• Average asking prices in October up 1.8% to £344,445
• ‘Full house’ with record price levels across all regions and buyer types
• Continued supply shortage pushing up prices

Asking prices of property coming to market increased by 1.8% (+£5,983) in October on the previous month, marking the biggest seasonal jump since October 2015.

Last month also saw a ‘full house’ for first time since March 2007, according to Rightmove’s latest house price index. This means that price records were reached across all regions of Great Britain and for all sectors of buyers – namely first-time, second-stepper and top-of-the-ladder.

The number of sales agreed was up 15.2% in September, versus 2019, which was the was the last ‘normal market’ comparison, said Rightmove.

Director of property data, Tim Bannister, said: “Competition for property for sale remains hot this autumn, with average prices jumping by almost £6,000 in the month.

“Although more properties are coming to market, the level is still not enough to replenish the stock that’s being snapped up. Consequently, new price records have been set across the board, with every region of Great Britain and all of the three market sectors.”

He added that the ‘full house’ is an ‘extremely rare’ event, seen for the last time since March 2007.

Property stock shortages – which began after the first lockdown – look set to continue against the backdrop of a strong housing market, said Bannister, while fixing in a mortgage rate before rates rise is proving an additional incentive.

11 November: Parents Mull Buy-To-Let To Help Children At University

Two-thirds of parents would consider investing in a buy-to-let property near their child’s university to help with living costs while they are away from home. And over half (53%) would consider downsizing to help their children financially through their student years.

These are two key findings from a new report from Trussle, our mortgage broker partner.

Rents from properties in university locations can be significantly higher, and rates of occupancy more sustained, than in non-student locations, making investment an attractive proposition for property investors. 

Mortgage requirements

Many would-be buy-to-let landlords, especially those entering the market for the first time, will need to take out a special mortgage to fund the purchase. These usually require the annual rental income to exceed the mortgage due for the period by a significant amount – say, by 25% – to cover the risk of tenants defaulting and the property being vacant for lengthy so-called ‘void’ periods.

Additionally, the interest charged may be higher than for normal residential mortgages because of the risks involved.

The picture for parents seeking accommodation for their student offspring is complicated by the fact that standard buy-to-let mortgages exclude tenancies involving close relatives. This is because of the expectation that the landlord will not charge a realistic amount of rent or will be more forgiving on any non-payments.

However, a limited number of lenders offer ‘family’ buy-to-let deals that allow children to occupy the property. But in such cases, the borrower may need to demonstrate that they have sufficient earnings to cover the mortgage themselves – or their child’s part of it, in cases of multiple tenancy.

It’s also worth noting that buy-to-let mortgages are arranged on an interest-only basis, meaning the capital debt will need to be cleared in one go at the end of the term. That could mean using the proceeds of a property sale or finding the funds elsewhere.

All buy-to-let purchasers also pay higher rates of stamp duty or land tax on the purchase price. And multiple tenancy landlords are required to be licensed so they can be monitored for the standard of accommodation provided.

But Trussle says that rents from student buy-to-lets consistently outstrip the rest of the domestic rental market by 18%, making them an attractive long-term proposition for parents who may continue letting them out after their child has graduated.

Miles Robinson at Trussle said: “It’s true that buy-to-lets aren’t the bargain that they once were. Changes to tax and the Stamp Duty Surcharge have impacted returns, which made rental the king of investments, leading to a peak in popularity during 2007.

“However, this new data shows that property is still seen as a safe and reliable way of generating extra income. This can be both in the short-term, through rent collection, and long-term gains in house prices. In addition, the low interest climate means would-be landlords can lock-in a competitive buy-to-let mortgage.”

For those contemplating a buy-to-let property in a university town, Trussle identified the top towns and cities that offer the best rental yields. It used data from Zoopla and the Times Higher Education guide to calculate the property prices and rental yields in the top 30 universities across the UK.

Top 5 Rental Yields Among Top 30 UK Universities

The research also revealed the UK’s cheapest university towns to purchase a buy-to-let property. Belfast (Queen’s University) topped this list with an average house price of £152,175.

Cheapest University Locations To Purchase Buy-To-Let Property

For its research, Trussle interviewed 2,000 homeowners with children and examined house prices across 30 popular university towns and cities postcodes in the UK, using Zoopla. The top 30 universities used in the release were determined using the Times Higher Education Guide.

5 November: Halifax Sees Annual House Price Inflation Hit 8.1% 

• Average UK property price in October £270,027
• Annual price inflation 8.1%, up from 7.4% in September
• Wales, Northern Ireland and Scotland outperform UK average

The upward trajectory of house prices continued in October, according to Halifax’s latest house price index. The cost of an average UK property increased by 0.9% last month – more than £2,500 – marking the fourth consecutive monthly rise.

Annual inflation for October stood at 8.1%, which is the highest rate the mortgage lender has recorded since June. At just over £270,000, the cost of an average UK home is now £31,516 (13.2%) more expensive than in the first lockdown in April 2020.

Russell Galley, managing director at Halifax, explained: “One of the key drivers of activity in the housing market over the past 18 months has been the ‘race for space’, with buyers seeking larger properties, often further from urban centres. Combined with temporary measures such as the cut to Stamp Duty, this has helped push the average property price up to an all-time high of £270,027.”

Mr Galley added that the performance of the economy continues to provide a “benign backdrop” to housing market activity. He said the labour market was “outperforming expectations through to the end of furlough, with the number of vacancies high and rising relative to the numbers of unemployed.”

While the Bank of England opted to keep interest rates on hold yesterday, it’s still expected to increase base rate by the end of this year to tame risks of rising inflation, while further hikes are likely in 2022. As a result, Halifax expects house buying demand to cool in the months ahead as the cost of mortgages increases. 

That said, borrowing costs will still be low by historical standards and raising a deposit is likely to remain the primary obstacle for many.

Record growth

Miles Robinson at our mortgage partner Trussle commented: “Over the past year, house prices have seen record growth, as government support helped keep the market buoyant during lockdown. While it’s positive that house prices remain strong, we must face up to the fact that activity in the market will likely slow in the coming months, and as a consequence we could see house prices begin to dwindle.

“A rise in inflation is on the cards and any increase will almost certainly trigger a corresponding spike in interest rates. As such, in contrast to previous months, buyers will likely begin to take a more cautious view of the market until they have more clarity on any potential rate rises.

“Alongside this, it looks set to be a difficult winter for household finances. Families are facing a steep rise in energy bills as well as an increase in the general cost of living. This squeeze in consumer spending will almost certainly impact people’s ability to save for deposits and ultimately move home.

“For existing homeowners who are on a standard variable rate or who are nearing the end of their mortgage term, now is the perfect time to lock-in a long-term deal at a good interest rate. While many of the much publicised sub 1% interest rate deals have started to quietly disappear, this is likely the lowest level they will reach.”

Wales remains the strongest performing region in the UK, according to Halifax, with annual house price inflation of 12.9% (average house price of £198,880), while London remained by far the weakest performing area, with prices just 0.8% higher than this time last year.

4 November: Relief for borrowers as Bank rate stays at 0.1% – for now

The Bank of England said today that its Bank base rate will remain at 0.1% at least until 16 December, when the next announcement is due. Its Monetary Policy Committee, which decides the rate, voted 7-2 on Tuesday to keep it at its current record low, where it has been since March 2020.

There has been widespread speculation that the base rate will rise sooner rather than later in a bid to keep a lid on rising prices – inflation is currently running above 3%, with the official target at 2%. But the Bank is conscious that any increase would filter through to the cost of borrowing, heaping pressure on millions of mortgage customers and potentially threatening the post-Covid economic recovery.

That said, many lenders have priced-in a base rate increase to the deals they are currently offering. And the Bank itself has said that base rate might hit 1% by the end of 2022 in response to inflationary pressures such as soaring wholesale energy prices.

You can use our interactive rates calculator to find deals for your exact requirements.

Commenting on today’s announcement, Dan Boardman-Weston at BRI Wealth Management, said: “Many were expecting a hike today in the face of rising inflation, but the decision is quite finely balanced. Economic growth is showing signs of weakening and a lot of the inflationary pressures that the economy is seeing are global in nature and likely to be transitory.

“We’d expect to see some small movements higher over the coming months but the Bank is unlikely to make significant changes given slower growth, the threat of Covid resurgence and the transitory nature of this inflation. We continue to believe that interest rates will stay low in a historic context and that the Bank will be cautious about aggressively responding to this bout of inflation.”

3 November: Nationwide sees average property value top £250,000 for first time

• Average UK house prices in October bust £250,000 mark for first time
• Annual house price growth stands at 9.9%
• Outlook for property market ‘extremely uncertain’

Average house price growth in the year to October pushed ahead at 9.9%, according to figures from Nationwide published today – just marginally lower than the 10% recorded in September.

Monthly growth was recorded at 0.7%, taking seasonality into account, compared to 0.2% in September.

The latest boost pegs the cost of an average home in October at £250,311 compared to £248,742 in September.This marks a £30,728 price rise since the start of the pandemic in March 2020 – as well as the first time average values have passed the £250,000 mark in the history of the lender’s house price index.

Robert Gardner, Nationwide’s chief economist said: “Demand for homes has remained strong, despite the expiry of the stamp duty holiday at the end of September. 

“Indeed, mortgage applications remained robust at 72,645 in September, more than 10% above the monthly average recorded in 2019. Combined with a lack of homes on the market, this helps to explain why price growth has remained robust.”

However, Mr Gardner added that the outlook for the property market remained “extremely uncertain”. Consumer confidence has weakened in recent months, while the growing likelihood of a rise in interest rates could exert a cooling influence on the market, he said.

It also remains to be seen how the wider economy will respond to the withdrawal of government support measures.

Miles Robinson, head of mortgages at our broker partner, Trussle, commented: “While house price growth is continuing to exceed expectation, it may well start to stutter as inflation and potential interest rate rises could mean buyers begin to be more cautious in the months ahead.”

He added that now could be a good time to lock in a competitive interest rate with a fixed term mortgage: “A high interest rate can increase monthly repayments significantly, but many lenders are still offering sub-1% interest rates on mortgage products. This may not last, however, with the Bank of England signalling that a rate increase is imminent, so acting quickly is vital.”

Unsatisfied demand

Guy Gittins, CEO of estate agents Chestertons, said: “Buyer demand remains unsatisfied and properties are going under offer increasingly faster.

“In October we witnessed a 22% uplift in the number of offers being made and a 26% increase in agreed sales compared to September. The sustained demand is reducing the supply of properties for sale, which in turn is driving prices higher. This is providing further motivation for people to move before the house they want to buy becomes more expensive. 

Mr Gittins said buyer enquiries normally tail off in the latter months of the year, but they are in fact increasing: “At the end of last month, we recorded our highest ever number of new buyer enquiries at this time of year, which was 18% higher than this time last year when. We saw demand being driven by buyers who didn’t manage to agree a deal within the Stamp Duty holiday timeframe and those who put their search on hold during the summer break.

“Looking ahead, we expect the anticipated small increase in interest rates (likely to be announced tomorrow), to spur more buyers to finalise their property search sooner rather than later in order to benefit from the currently more favourable rates.” 

21 October 2021 – HMRC property transactions

• Property transactions soared in September 2021, up 67% from August
• September’s figure almost 70% higher compared with the same month in 2020

UK property transactions rose sharply in September 2021, with seasonally adjusted figures up 67.5% month-on-month to 160,950, according to the latest data from HM Revenue & Customs (HMRC).

HMRC said September’s figure was also 68.4% higher than the one recorded for the corresponding month in 2020. It estimated the provisional, non-seasonally adjusted figure for UK residential transactions in September 2021 at 165,720.

In September, the government brought to an end the temporary Stamp Duty Land Tax holiday in England and Northern Ireland that had been in place since July 2020. The measures incentivised buyers as they looked for properties with greater indoor and outdoor space on the back of the coronavirus pandemic.

Lawrence Bowles from the estate agents Savills said: “As if this year hasn’t been enough of a rollercoaster already, transaction figures released this morning show 166,000 homes changed hands in September. That’s 63% higher than the 2017-19 average.

“There’s more to this activity than a stamp duty holiday… record-low mortgage rates, desire for more space and a core of unmet pent-up demand all continue to push up transaction volumes.”

20 October: ONS House Price Index Charts +10% Rise

• Average UK house price up 10.6% in year to August
• Average UK property now worth £264,244
• Annual price growth strongest in Scotland at 16.9%

Average UK house prices increased by 10.6% in the year to August 2021, up from 8.5% recorded a month earlier, according to the UK House Price Index from the Office of National Statistics (ONS).

The ONS said the average price of a UK property stood at £264,244 in August this year. This compares with £256,000 a month earlier.

At country level, the ONS said Scotland, at 16.9%, recorded the largest annual house price growth in the year to August 2021. This compared with 12.5% in Wales and 9.8% in England to the same date.

Regionally, around England, annual house price growth was highest in the North East where prices increased by 13.3% to August. This was followed by 12.4% in the North West and 11% in the West Midlands. 

London registered the lowest regional price growth over the past 12 months to August at 7.5%. 

However, this figure was more than three times greater than the 2.2% it recorded to July this year, prompting Lucy Pendleton, property expert at estate agents James Pendleton, to describe the rise as “quite a jump. The capital has turned a corner and we expect the London market to now mount a charge.”

Nicky Stevenson at estate agent Fine & Country said: “Just when you thought it was safe to predict the end of the housing boom, you get another dramatic spike in prices. 

“This data captures the final surge of the stamp duty holiday as buyers put their foot back on the gas to complete transactions before the end of the Chancellor’s tax breaks.”

18 October: Rightmove House Price Index Sees Records Broken

• Records broken across all GB regions for first time in 14 years
• Average property price hits all-time high of £344,445
• Monthly average price increase of 1.8% is largest in six years

Average property prices rose to record levels across every region in Great Britain this month, the first time this has happened since March 2007, according to the latest data from Rightmove.

The property portal’s house price index shows that the average price of properties coming to market jumped on average by £5,983 in October 2021. Rightmove said the month-on-month rise of 1.8% is the largest since October 2015. 

The company added that the increase was down to “strong housing market fundamentals and a window of opportunity to buy before a potential interest rate rise”.

Rightmove also reported record average price rises for the month across all British regions as well as all market sectors, namely, first-time buyers, second-step property purchasers and so-called ‘top-of-the-ladder’ buyers. The last time this happened was in March 2007.

Tim Bannister at Rightmove said: “This ‘full house’ is an extremely rare event. 2021 has been the year of the power buyer, with those in the most powerful position to proceed quickly and with most certainty ruling the roost over other buyers who have to sell but have yet to come to the market.

“Buyers being able to prove they are mortgage-ready or have cash in the bank helps them get up the pecking order. While available stock for sale is still close to record lows, there are signs that this has stopped falling and is stabilising this month, so fresh new choice is slowly growing.”

14 October: Total value of homes in Britain ‘tops £9 trillion‘

At-a-glance:

• Combined value of Britain’s homes is £9.2 trillion
• Market value has risen by £550 billion in 12 months
• Average British home worth £50,000 more than in 2016

Britain’s homes had a total value of £9.2 trillion on the open market this summer, according to property portal Zoopla. It said the combined value of Britain’s 28.6 million residential homes increased by £550 billion in the past year.

Zoopla said this was due to “soaring buyer demand as a result of the pandemic-led ‘search for space’ as well as the stamp duty holiday”.

It calculated that the total value of Britain’s 23.5 million privately-owned homes was £8.2 trillion in July this year. Zoopla said around £6.6 trillion of this figure was equity, with outstanding debt accounting for around £1.6 trillion.

Britain has a further five million affordable homes worth around another £1 trillion.

According to Zoopla’s figures, the average British property has risen in value by £49,257 over the past five years. More than two-thirds of homes in each of 53 local authorities around Britain have risen by a figure greater than this amount.

Topping the list was Monmouthshire where, according to Zoopla, 88.2% of homes have risen by more than the average. This was followed by Hastings (83.1%) and Trafford (82.2%).

The total value of housing in London stood at £2.4 trillion in 2021 making it the most valuable region. Behind the capital came the South East of England (£1.7 trillion) and the East of England (£1 trillion).

In terms of rising values over a five-year period, Zoopla said that the South East of England had outstripped all other regions.

UPDATE 7 October 2021: Halifax reports record average UK property price 

• Average UK property price £267,587 highest on record
• Annual house price inflation up to 7.4%
• Prices in Wales and Scotland continue to outpace UK average 

Average UK property prices reached another record high last month, according to Halifax.

The bank’s monthly house price index shows the average property was valued at £267,587 in September 2021. This is a 1.7% increase month-on-month compared with August’s figure of nearly £263,000, itself a record. 

Halifax said the latest monthly rate of growth is the largest since February 2007. It added that year-on-year UK house price inflation was 7.4% in September, reversing a three-month downward trend.

Wales continues to outstrip any other area in the UK with average annual house price growth of 11.5%,. Scotland (8.3%) also outperformed the UK national average. The South West (9.7%) remains England’s strongest performing region, while the weakest was the South East (7%). 

Russell Galley, Halifax’s managing director, said: “While the end of the stamp duty holiday in England and a desire among homebuyers to close deals at speed may have played a part in these figures, it’s important to remember that most mortgages agreed in September would not have completed before the tax break expired. 

“This shows that multiple factors, including the ‘race for space’, have played a significant role in house price developments during the pandemic.”

Miles Robinson at online mortgage broker Trussle said: “With so little housing stock across the country, it is likely that momentum will continue, and the market will remain active in the coming months. 

“The race for space, coupled with many companies still allowing employees to work from home, means countryside locations in particular are continuing to be extremely popular.”

UPDATE 30 September 2021: Nationwide House Price Index

At-a-glance

• Average UK house price is £248,742 in September, down 0.1% from August
• Annual house price growth stands at 10%
• Wales is strongest performing region, up 15.3% year-on-year

House price growth in the UK slowed sharply to 0.1% month-on-month in September, down from the 2.1% recorded in August.

According to the Nationwide’s House Price Index (HPI), annual house price growth fell back to 10% this month, down from 11% in August. The lender said the average home is now valued at £248,742, about 13% higher than before the pandemic began in early 2020.

Nationwide reported Wales as the strongest performing region, with house prices up 15.3% year-on-year, the highest rate of growth since 2004. Next best was Northern Ireland (14.3%), followed by Yorkshire & Humberside (12.3%), then Scotland (11.6%).

Robert Gardner, Nationwide’s chief economist, said: “Annual house price growth remained in double digits for the fifth month in a row in September, though there was a modest slowdown to 10% from 11% in August.

“House prices have continued to rise more quickly than earnings in recent quarters, which means affordability is becoming more stretched. Raising a deposit remains the main barrier for most prospective first-time buyers. A 20% deposit on a typical first-time buyer home is now around 113% of gross income, a record high,” Gardner added.

Miles Robinson, head of mortgages at our online broker partner Trussle, said: “The Nationwide index certainly indicates that the market is starting to contract, which is to be expected as the stamp duty holiday finally draws to a close this month. The growth rate for this month was marginal, but house prices have still increased 10% year-on-year, and demand still significantly outweighs supply.

“With such little housing stock across the country, however, it is very likely that momentum will continue, and the market will remain buoyant for several months to come,” he added.

UPDATE 28 September 2021: House Price Inflation Hits Young And Low Paid In Tourist Hotspots – ONS

At-a-glance:

• Rising prices and rents forcing low earners away
• Hospitality sectors struggling to recruit staff
• North Wales, Devon and Yorkshire seeing high inflation

The Office for National Statistics (ONS) is warning that rising house prices and private rents in rural and coastal areas are increasingly pricing low-paid and young workers out of areas where they live.

It says this has implications for hospitality businesses in these areas because it leaves them unable to fill job vacancies.

The ONS reported that house prices in locations such as Conwy in North Wales (25%), North Devon (22%) and Richmondshire in the Yorkshire Dales (21%), each rose at more than three times the national rate in July 2021.

In addition, areas including the Derbyshire Dales, Powys and Eden in Cumbria each recorded house price rises of 10% or more every month between January and July 2021.

By contrast, the seven areas that each recorded house price falls during July were all in London, including City of London, plus the boroughs of Westminster, Lambeth, Camden, Islington, Lewisham and Newham.

According to the ONS, workers in tourist hotspots earn less on average than people who live there. As an example, it referred to residents in the Cotswolds in April 2020 who earned nearly 29% more than people who were employed in the area.

The ONS added that there were similar differences between the earnings of residents and workers in other tourist areas such as the Derbyshire Dales (27%) and Allerdale (24%) in the Lake District. 

For full-time employees, the median hospitality salary in April last year was £22,779, a figure that was 28% lower than the national average of £31.461.

The ONS also said that hospitality workers were the most likely to be furloughed during the pandemic. As a result, tourist hotspots were among the areas with the highest average furlough rates during this period.

The government’s furlough scheme, which protected millions of jobs during this period, is to close on 30 September.

UPDATE 28 September 2021 – Zoopla House Price Index

At-a-glance:

• Average UK house price stands at record high of £235,000
• Prices up 6.1% in year to August 2021
• Wales records highest regional annual price growth at 9.8% 

UK house prices reached a record high last month, with the average property worth £235,000 according to the house price index from Zoopla, the property portal.

Zoopla reported annual house price growth of 6.1% in the year to August 2021. It added that the property market is moving at its fastest pace in five years, with homes consistently going under offer in less than 30 days since May this year.

Having removed a full-blown stamp duty holiday from England and Northern Ireland at the end of June, the UK government withdraws its remaining framework of tapered stamp duty reliefs at the end of this month.

Despite the removal of these reliefs, which have translated into savings for homebuyers of up to £15,000 per property, Zoopla reported that there had been “little evidence of a change to buyer behaviour” in recent months and “no sign of a cliff-edge of demand”.

At a regional level, Wales recorded the highest house price growth at 9.8% over the past year to August, followed by Northern Ireland (8.4%). 

Annual price growth among the UK’s major cities was highest in Liverpool at 9.8% and Manchester (8.1%). In last place came London with growth of 2.2%. According to Zoopla, the average house price in the capital now stands in excess of £500,000.

Gráinne Gilmore, Zoopla’s head of research, said: “The demand coming from buyers searching for space, and making lifestyle changes after consecutive lockdowns, has further to run.

“Balancing this, however, will be the ending of government support for the economy via furlough, and more challenging economic conditions overall, which we believe will have an impact on market sentiment as we move through the fourth quarter of this year.”

UPDATE 21 September 2021 – HMRC property transactions

At-a-glance

• Property transactions rebound in August 2021 following July’s sharp decline
• August’s figure up 20% compared with the same month last year 

UK property transactions bounced back in August 2021, with seasonally adjusted transactions up 32% from the previous month to 98,300, according to the latest data from HM Revenue & Customs (HMRC). 

HMRC said August’s figure was also 20% higher than the one recorded for the corresponding month in 2020. It estimated the provisional, non-seasonally adjusted figure for UK residential transactions in August 2021 at 106,150.

August’s data followed a month that saw transactions plummet by more than 60%. 

This month, the government will bring to an end the temporary Stamp Duty Land Tax holidays in England and Northern Ireland that have been in place since July 2020. The measures have incentivised buyers as they looked for properties with greater indoor and outdoor space on the back of the pandemic.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “The property market was just pausing for breath in July, and set off again in August, albeit at a slightly less frenetic pace.”

“The withdrawal of most of the stamp duty breaks at the end of June meant buyers made a dash for the finish line, leaving a gap in July. However, August’s figures show that this was a temporary pause rather than a full stop,” she added.

UPDATE 20 September 2021 – Rightmove House Price Index

• Average price of properties coming to market hits all-time high of £338,462
• Market “stock starved” but supply and demand forecast to balance out this autumn
• The rise of the ‘power buyer’ continues

The national average asking price of newly marketed properties rose this month to an all-time high of £338,462, according to the latest data from property portal Rightmove.

Rightmove said fierce competition among buyers has continued against the backdrop of a record low number of properties for sale, with the high ratio of buyer demand to properties for sale resulting in a continued “stock starved” market.

It added that the rise of the ‘power buyer’, those who have already sold their own homes, have cash in the bank, or are first-time buyers with a mortgage agreed, shows no signs of stopping. 

Tim Bannister, Rightmove’s director of property data, said: “Competition among potential buyers to secure their next home is now more than double what it was this time in 2019.”

“Agents report that buyers who have yet to sell are being out-muscled by buyers who have already sold subject to contract. Proof that you are mortgage-ready, or can splash the cash without needing a mortgage, will also help you to get the pick of the housing crop,” he added.

The property portal said there were signs that supply and demand for properties could start to balance out this autumn. The number of new listings posted on Rightmove in the first two weeks of September was 14% higher compared with the figure for the last two weeks of August.

Five areas of Great Britain: the South West, East Midlands, Wales, East of England, and the South East, each recorded annual house price growth in excess of 8%.

UPDATE 15 September 2021 – ONS House Price Index

• Average UK property now worth £256,000
• Average prices up 8% year-on-year
• Price growth strongest in Scotland over the past 12 months

Average UK house prices went into reverse in July this year after hitting record highs a month earlier, according to the UK House Price Index from the Office of National Statistics (ONS).

The ONS said that the average price of a UK property stood at £256,000 in July 2021. This compared with the £265,000 recorded in June.

Despite the month-on-month decline, the ONS said that average prices in July were up overall by around 8%, or £19,000, compared with a year earlier. The increase in June was 13.1%.

July’s house price fall coincided with the start of a tapering to the UK government’s Stamp Duty holiday incentive. Read more about the Stamp Duty Land Tax changes here. 

In March this year, the Chancellor announced an extension to the Stamp Duty holiday in England and Northern Ireland. This meant that the tax holiday was extended until 30 June 2021 after which the ‘nil rate’ threshold decreased from £500,000 to £250,000 until 30 September 2021. 

From 1 October 2021, the Stamp Duty thresholds will revert to what they were before 8 July 2020. The tax holiday for Scotland ended on 31 March 2021. The tax holiday in Wales ended on 30 June 2021.

According to the ONS, the average house price in Scotland increased by 14.6% in the year to July 2021. In Wales the figure was 11.6%, while England recorded growth of 7%.

Regionally, the North East has enjoyed the strongest house price growth over the past year, with a figure of 10.8% to July.

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “A combination of the stamp duty holiday, low mortgage interest rates, increased demand for space and a lack of supply has created the perfect environment for sellers – but a very difficult market for buyers.

“The price decrease from June to July could signal a turning point in the market and a shift in the level of activity seen over the last year. If this is the case, it is certainly good news for those buyers who have missed out in the last six months.”

14 September 2021: Mortgage Broker Trussle Unveils Speed Promise Backed By £100 Offer

Forbes Advisor’s UK mortgage broking partner, Trussle, has announced its Mortgage Speed Promise, which will provide customers with mortgage advice within 24 hours and a mortgage decision within five days. Eligible customers who do not receive a decision within 5 days will receive £100 in compensation.

Trussle claims to be the first mortgage broker to offer a service that promises mortgage decisions to customers within five days.

It says it is trying to tackle the problems experienced by many would-be borrowers who find it difficult to get a timely mortgage decision from a lender, arguing that the pandemic has exacerbated the issue, with average mortgage approval times slowing down dramatically.

While some lenders such as Halifax are now back to pre-pandemic processing times of around three days, the broker says its internal data suggests other high street lenders can take 15 days or more.

Because of the lack of consistency in mortgage approval times among lenders, Trussle will only work with the UK’s fastest lenders to deliver on its five-day service commitment. Initially, nine lenders will be part of the promise including Halifax, HSBC, Barclays and Clydesdale.

Alongside this, Trussle is actively working with a wide range of lenders to improve their approval times and include them in its Speed Promise at a later date.

Ian Larkin, Trussle’s CEO, said: Buying a new home should be an exciting time, and so it’s such a shame that it’s considered one of the most stressful processes in life. Trussle was created to make mortgage applications easier and now we want to give our customers the certainty they desperately need at a very early stage in the process. 

“By using technology and automation to cut out needless hassle, we can give our customers decisions in days not weeks, without compromising on service, to hopefully bring some of that excitement back to buying a home.”

Borrowers will not be required to submit further documentation beyond what is currently required for a mortgage application, and a wide range of mortgage products with market-leading rates will be available, including high LTV, buy-to-let and remortgages. Any eligible customer who does not receive a decision within 5 days will receive £100 in compensation. Terms and conditions apply.

Update 7 September 2021: Halifax sees record average UK property price at £263,000

At a glance…

• Average UK property price £262,954, highest on record
• Figure is £23,600 higher than June 2020
• Annual house price inflation eases to 7.1%

Halifax bank’s monthly house price index for August confirms that UK property prices are continuing to rise, although the rate of annual increase, at 7.1%, is down from the 7.6% recorded in July.

The month-on-month increase was 1.2%.

The bank says the average UK property price stands at £262,954, which is a record high. The previous peak was in May (£261,642). Demand has been fuelled in recent months by changes to stamp duty rules, including the ending of the tax holiday in Wales and the tapering of relief in England.

You can find out more about stamp duty rates and rules here.

Russell Galley at Halifax said there are other significant factors driving house price inflation: “Structural factors have driven record levels of buyer activity, such as the demand for more space amid greater home working. 

“These trends look set to persist and the price gains made since the start of the pandemic are unlikely to be reversed once the remaining tax break comes to an end later this month.”

Mr Galley added that economic conditions will continue to to support property prices: “The macro-economic environment is becoming increasingly positive, with job vacancies at a record high and consumer confidence returning to pre-pandemic levels. 

“Coupled with a supply of properties for sale that looks increasingly tight, and barring any reimposition of lockdown measures or a significant increase in unemployment as job support schemes are unwound later this year, these factors should continue to support prices in the near-term.”

In terms of regional variances, Halifax says Wales is the strongest performing area, with annual house price inflation at 11.6% – the only double-digit rise recorded in the UK during August. 

South-west England is also still experiencing strong growth at 9.6%, reflecting demand for rural living within the region. 

Price inflation in Greater London continues to lag the rest of the country, according to the Index, registering a 1.3% annual increase in prices in August. Over the latest rolling three-monthly period, the capital was the only region or nation in the UK to record a fall in prices (-0.3%). 

The year-on-year rise in London was also the weakest seen in 18 months, says Haliax, though it notes that the average price in the capital – at £508,503 – remains far above the average national price.

UPDATE 2 September 2021: Nationwide cuts mortgage rates to ‘lowest-ever’ 0.87%

Nationwide is launching its lowest-ever mortgage rate for new lending after cutting its fixed and tracker range rates by up to 0.40%, to below the psychological 1% barrier

Those with a 40% deposit will be able to take advantage of a two-year fixed rate mortgage at just 0.87% or a two-year tracker at 0.99%. However, the deals come with hefty fees of £1,499 and £999, respectively.

Elsewhere, the building society is offering a 75% LTV deal at 1.00% with a £1,499 fee and a two-year fix for first-time buyers holding a 5% deposit at 2.99% (down from 3.24%) subject to a £1,499 fee. Nationwide’s first-time buyer mortgages come with £500 cashback.

The reductions haven’t just been reserved for new buyers though – remortgagers can also get the 0.87% rate on a two-year fix at 60% LTV – again for a fee of £1,499. 

The biggest price cut in its remortgage range is on the building society’s two-year tracker mortgage at 60% LTV at 0.99% (down from 1.39%).

Henry Jordan at Nationwide said: “These latest reductions will offer those looking for a new deal one of the best rates available. However, reductions have been made at all loan to value levels so whether someone is buying a new home, remortgaging their existing property or getting a further advance to improve their home we have a range of mortgages on offer to suit their needs.”

Rates below 1% – but watch for high fees

Despite being the lowest rates Nationwide has ever offered, a spate of new sub 1% deals have recently come to the market from rival lenders – one of which is lower still.

Halifax has a two-year fixed rate mortgage at 0.83% with a £1,499 fee or a higher rate of 0.87% if you pay a lower fee of £999. Both are for purchases only, though, and require a 40% deposit.

Rates continue to fall as lenders try to get more people on their books amid the post-pandemic property boom – despite the fact that the Stamp Duty Land Tax holiday in England, which incentivised so many buyers since July 2020, will expire at the end of September.

Not everyone will be eligible for a sub 1% mortgage deal, since offers are subject to status. Lenders will want to see that you’re a responsible borrower with a good track record of managing credit in the past.

The relatively high fees of £1,499 attached to some of these sub 1% mortgages might not be cost-effective if you need a relatively small mortgage. In fact, depending on how much you need to borrow, you may be better off choosing a no-fee deal with a slightly higher rate.

Also, if you’re currently tied into a fixed rate mortgage and want to take advantage of a competitive new deal, you may be penalised with early repayment charges that could wipe out any benefits from switching. 

And remember, rates could continue to fall, so if you sign up for one of the new cheap fixed-rate deals now, you won’t be able to jump ship when something cheaper potentially comes along without incurring penalty charges.
To see how much your repayments would be with one of Nationwide’s new deals or any other mortgage product, try our new mortgage calculator tool.

UPDATE 1 September 2021 – Nationwide House Price Index

At-a-glance…

• Average UK house price was £248,857 in August, up 2.1% from July
• Second largest gain month-on-month in 15 years
• Annual house price growth stands at 11%

House prices rose by 2.1% in August, the second largest month-on-month gain in 15 years, despite predictions that the recent scaling back of stamp duty reliefs would subdue demand in the UK’s property market.

According to the Nationwide House Price Index, annual house price growth rose to 11% in August 2021 with the average home valued at £248,857. Nationwide added that house prices are now about 13% higher than when the pandemic began.

Nationwide described the August increase as “surprising” following the tapering of stamp duty reliefs at the end of June. 

Robert Gardner, Nationwide’s chief economist, said: “The strength may reflect strong demand from those buying a property priced between £125,000 and £250,000 who are looking to take advantage of the stamp duty relief in place until the end of September, though the maximum savings are 1694093668 substantially lower.

“Lack of supply is also likely to be a key factor behind August’s price increase, with estate agents reporting low numbers of properties on their books. Activity will almost inevitably soften for a period after the stamp duty holiday expires at the end of September.”

Miles Robinson, head of mortgages at online mortgage broker Trussle, said: “Today’s results will come as a surprise as many expected to see a contraction in the market as the stamp duty holiday (in England) draws to an end. However, while unprecedented demand has meant sellers have very much been in the driving seat this past year, there are now some great opportunities for would-be house hunters. In particular, next-time buyers who have equity or larger housing deposits can take advantage of some incredibly competitive interest rates.”

Nicky Stevenson, managing director of national estate agency chain Fine & Country, said: “While the stamp duty holiday savings on big homes are quickly vanishing, a greater proportion of market activity is now in the mass market sector, buoyed by the resurgence of buy-to-let investing and first-time buyers.”

UPDATE 26 August 2021 – Zoopla notes ‘acute shortage’

At-a-glance

• Properties selling almost twice as quickly as in 2019
• Price growth highest in Wales and Northern Ireland

The UK property market faces an “acute shortage” of homes for sale, after a record number of transactions to beat changes to the temporary stamp duty regime used up available stock, according to the property portal Zoopla.

Latest figures from the firm’s House Price Index showed that the number of properties for sale in June dropped by 26.4% compared with the 2020 average.

Zoopla said buyer demand remains strong, up 20.5% compared with the 2020 average. The figures also showed that competition among buyers intensified through the second half of 2020 and into 2021. 

It said the average time to sell, measured as the time taken between a property being listed and a sale being agreed, now stands at 26 days, down from 49 days in 2019.

At a regional level, property price growth around the UK over the past year was highest in Wales (up 9.4%), Northern Ireland (9%) and the north west of England (7.9%). In terms of city locations, Liverpool led the way with price growth of 9.4%

Zoopla said first-time buyers have been increasingly active in 2021, supported by lenders that have reintroduced products accommodating higher loan-to-value (LTV) mortgages. See below for comment on the impact of LTV deals.

Maximum LTV mortgages ‘failing to secure market share’

• 95% mortgages accounted for just 1% of mortgages in July
• 49 lenders offer 95% mortgage deals

According to research from our mortgage partner, Trussle, the recent crop of 95% loan to value (LTV) mortgages coming to market is not resulting in successful applications from would-be borrowers. 

The online broker has seen interest in 95% LTV deals account for a quarter of all its mortgage enquiries in recent months, but says that just 1% of its mortgage completions were from 95% mortgages in July 2021. It attributes this to the fact that high LTV mortgages are subject to stricter lending criteria and require higher credit scores.

Additionally, many lenders do not accept ‘gifted deposits’ (where the borrower uses funds given to them by their parents, for example) on 95% LTV deals. Also, some property types like flats and new builds are ineligible for the 95% deals on offer.

Trussle says there are currently 49 lenders offering 95% LTV mortgages, with the number of lenders steadily increasing since March. Its data shows that 60% of all leads for 95% mortgages were first time buyers, with ‘next time’ buyers (34%) and remortgages (6%) making up the rest.

While 95% mortgages are struggling to make an impact on the market, Trussle says other high LTV mortgage brackets are seeing significant demand from consumers. For example, 90% mortgages have been a popular choice for those needing higher LTV products, accounting for 10% of Trussle completions in June 2021, the highest since August last year.

UPDATE 24 August 2021 – HMRC property transactions

At-a-glance

• Property transactions plummet by 63% month-on-month
• Reduction in stamp duty relief triggers decline

UK monthly property transactions fell dramatically in July 2021, with seasonally adjusted transactions for July standing at 73,740, a 62.8% drop compared with the figure reported in June, according to the latest data from HMRC.

The fall coincided with the tapering of a temporary, pandemic-enforced reduction in Stamp Duty Land Tax at the end of June in England and Northern Ireland.

Until 1 July, the first £500,000 of a property purchase was exempt from stamp duty. This figure now stands at £250,000 and will be reduced again, to £125,000, from 1 October 2021.

The end of June also marked the end of the temporarily increased nil rate band to £250,000 for residential Land Transaction Tax in Wales. It has reverted to £180,000.

HMRC estimated the provisional non-seasonally adjusted figure for UK residential transactions in July 2021 at 82,110. 

Adam Forshaw at conveyancing firm O’Neill Patient said: “It was to be expected that housing transactions would be lower in July, but 62.8% is quite a drop. Having said that, June was a record month as the conveyancing industry worked hard to get as many house sales over the line before the first phase of the stamp duty holiday ended.

“We are still seeing a good level of instructions in house sales and purchases as people are still eager to beat the final stamp duty holiday exemption on 30 September.”

UPDATE 18 August 2021 – ONS House Price Index

At-a-glance:

• Average UK property now worth £265,668
• Price growth strongest in north west of England
• Transactions in June 219% higher than 2020

The average price of a UK property was £265,668 in June 2021, according to the UK House Price Index from the Office of National Statistics (ONS).

The ONS said that, on average, property prices rose by 13.2% in the year to June 2021. 

It added that the strongest house price growth achieved over that period had been recorded in the north west of England with a return of 18.6% in the year to June.

Elsewhere around the regions, London recorded the most sluggish rise in annual growth returning a figure of 6.3% over the same period.

Figures from UK Property Transaction Statistics estimated that 198,240 transactions took place on residential properties worth £40,000+ in June 2021. This was a 219% increase on the same month a year ago.

Miles Robinson at online broker Trussle, said: “House price growth remains strong with an average increase of 13.2% over the year to June 2021. Much of this can of course be attributed to the buyers and sellers who grappled to complete before the 30 June higher threshold stamp duty deadline.”

“While house prices have increased on average, the industry is starting to see a slow-down in the rate at which property value is appreciating. With the stamp duty deadline coming to a complete close in the nearing weeks, it is likely that house price growth will start to cool off slightly,” Robinson added.

UPDATE 16 August 2021 – Rightmove House Price Index

At-a-glance

• Average asking price of properties coming to market down £1,076, a 0.3% dip
• Prices of larger properties slip by 0.8%
• Demand remains high for ‘mass market’ properties 

House asking prices fell for the first time in 2021, according to the latest data from property portal Rightmove.

The firm said the average price of property coming to market in August dipped by £1,076, a decrease of 0.3%. 

Rightmove explained that the slight cooling was mainly driven by a 0.8% fall in the price of upper-end, four-bedroom-plus properties, a result of the tapered stamp duty holiday which comes to an end next month.

It added, however, that first-time buyer and second-stepper properties – each less affected by the withdrawal of most stamp duty initiatives – continued to rise in price by 0.6% and 0.3% respectively.

The portal said that overall demand from buyers remains strong and suggested this could prompt an Autumn “bounce” in both prices and seller activity.

Tim Bannister, Rightmove’s director of property data, said: “New sellers dropping their asking prices can ring economy alarm bells, especially when it’s the first time so far this year.

“It’s important to dig underneath the headline figures. We are in the holiday season which means that sellers have traditionally tempted distracted buyers with lower prices. Our analysis shows that average prices have only fallen in the upper-end sector, which is usually more affected by seasonal factors such as the summer holidays.”

UPDATE 6 August 2021 – Halifax UK House Price Index

At-a-glance

• Average UK house price stands at £261,221 in July 2021, up 0.4% from June
• Annual house price growth slowed to 7.6%
• Wales records strongest house price growth for 16 years

UK house prices rose by 0.4% in July, with the average property now worth £261,221, according to the Halifax House Price Index.  

Halifax reported a fall in annual house price growth to 7.6% in the 12 months to July 2021. 

The lender said this easing was to be expected for two reasons. First, the price inflation experienced by the property market last summer as it emerged from the first lockdown and, second, the buying activity prompted by the government’s time-limited stamp duty holiday initiative.

According to the Halifax, Wales recorded an annual house price increase of 13.8% to the end of July, its strongest growth figure since 2005. The North West England, Yorkshire and Humberside, and the South West also posted double-digit rises year-on-year.

Russell Galley, the Halifax’s managing director, said: “Recent months have been characterised by historically high volumes of buyer activity, with June the busiest month for mortgage completions since 2008. This has been fuelled both by the ‘race for space’ and the time-limited stamp duty break.

“With the latter now entering its final stages, buyer activity should continue to ease over the coming months, and a steadier period for the market may lie ahead,” Galley added.

Miles Robinson, head of mortgages at Trussle, the online mortgage broker, said: “There are many positives for homeowners to take from the market at the moment. An increasing number of high-profile lenders are now offering sub 1% mortgage products, with some available on a fixed-term rate for up to five years.”

UPDATE 2 August 2021 – Londoners flock to buy homes outside capital

At-a-glance

• Record number of Londoners buy homes outside capital
• Properties located on average 34.6 miles from capital
• Pandemic-fuelled city ‘out-migration’ shows no sign of stopping

Londoners bought a record number of homes outside the capital in the first six months of 2021 according to estate agent Hamptons.

The firm said Londoners have led the way in “city out-migration”, one of the key property market trends of the pandemic. Between January and June 2021, Londoners bought 61,830 homes outside the capital, with properties located an average 34.6 miles away from the capital.

Hamptons said this was the highest half-year figure since its records began in 2006. Putting the figure into context, the estate agency said it was only 10,030 homes fewer than those sold in London during the whole of 2020.

On average, Londoners paid £389,975 for their new properties. 

So far this year, Londoners made up 8.6% of all buyers outside the capital. This was the highest proportion on record and up from the 6.6% reported over the same period last year.

Aneisha Beveridge, head of research at Hamptons, said: “Pandemic-fuelled city out-migration shows no sign of slowing. Despite lockdown easing and offices and restaurants re-opening, Londoners have continued to re-evaluate where they want to live.

“The capital’s loss has been the Home Counties’ gain. The mix buying beyond the capital has changed, with first-time buyers more likely to leave London than ever before.”

UPDATE 28 July 2021 – Nationwide House Price Index

At-a-glance

• Average UK house price stands at £244,229 in July 2021, down 0.5% from June 
• Annual house price growth slowed to 10.5% 

House prices fell by 0.5% in July thanks to the tapering of stamp duty relief in England and the ending of the duty holiday in Wales.

According to the latest Nationwide House Price Index, annual house price growth slowed to 10.5% in July 2021, having peaked at a 17-year high of 13.4% a month earlier. It described July’s reverse as a “modest fallback”, saying this is unsurprising given the significant gains recorded in recent months. 

Robert Gardner, Nationwide’s chief economist, said: “House prices increased by an average of 1.6% a month over the April to June period, more than six times the average monthly gain recorded in the five years before the pandemic.

“The tapering of stamp duty relief in England is likely to have taken some heat out of the market. This provided a strong incentive to complete house purchases before the end of June.”

Nationwide said stamp duty changes drove the number of housing market transactions to a record high of almost 200,000 in June as homebuyers rushed to meet the deadline. This was around twice the number of transactions recorded in a typical month before the pandemic and 8% above the previous peak seen in March 2021.

UPDATE 27 July 2021 – Savills predicts 9% price growth

At-a-glance

• Savills predicts 9% UK house price growth for 2021
• Prices set to rise by 21.5% over five years to 2025
• Property markets in the Midlands and the North-East of England expected to perform best

Estate agency Savills has predicted that UK house prices will rise by 9% in 2021 thanks to a combination of factors including extended stamp duty holidays, plus the impact of repeated lockdowns on what buyers want from their homes.

Savills said it also expects average house prices to rise by a further 3.5% next year and by a total of 21.5% in the five years to the end of 2025.

Since the property market re-opened last year after the first phase of the pandemic, Savills said price growth had been driven in large part by more affluent buyers, less reliant on mortgage debt and able to lock into low, fixed interest rates. Homes featuring plenty of space, both inside and out, have been high on buyers’ wish lists over the past year.

According to Savills, the property markets of both the Midlands and the North of England are anticipated to show the strongest price growth. It said both regions could sustain a rise in house prices before homes in these areas become unaffordable.

Lucian Cook, Savills’ head of residential research, said: “Some of the growth generated by the extraordinary market conditions of 2020 and 2021 could unwind during 2022, but we see nothing on the horizon that would trigger a major house price correction.

“New buyer demand continues to outweigh supply. This imbalance looks set to continue,  underpinning further price growth over the near term, particularly as people look to lock into current low interest rates,” he added.

UPDATE 27 July 2021 – Zoopla House Price Index

At-a-glance

• Average UK house price stands at a record £230,700
• House prices up 5.4% in the year to June 2021
• Northern Ireland records highest house price growth in past year

UK house prices reached a new high last month, with the average property now worth £230,700, according to the house price index from Zoopla, the property portal.

Zoopla reported a 25% fall in the number of homes for sale in the first half of this year compared to the same period in 2020, resulting in what it describes as a “severe shortage” of housing stock. This has helped push up house prices by an average of 5.4% in the year to June 2021, it said.  

At a regional level, Northern Ireland recorded the highest house price growth at 8.6% over the past year, followed by Wales at 8.4%. The North West was responsible for England’s highest growth figure at 7.3%. In London, prices rose by 2.3% in the past 12 months. 

Zoopla said it expected price growth to edge up to 6% in the coming months before easing back by the end of the year once the impact of the extended stamp duty holiday has unwound. 

Grainne Gilmore, Zoopla’s head of research, said: “Demand for houses is still outstripping demand for flats. There is a continued drumbeat of demand for more space, both inside and outside, among buyers funnelling demand towards houses and resulting in stronger price growth for these properties.”

UPDATE 21 July 2021 – HMRC property transactions

At-a-glance

• Property transactions break record as buyers scramble to beat stamp duty deadline

UK monthly property transactions soared to record figures last month as would-be buyers scrambled to complete purchases ahead of changes to the rules on stamp duty. Seasonally adjusted transactions for June stood at 198,240, according to the latest data from HMRC. 

The figure was 219% higher compared with the same month in 2020 when the effects of the pandemic impacted heavily on the property market. Last month’s figure was also 74% higher than the one recorded for May 2021, according to HMRC.

HMRC estimated the provisional non-seasonally adjusted figure for UK residential transactions in June 2021 at 213,120. This was the highest monthly figure since records began in 2005.

Last month’s flurry of activity coincided with an end to the temporary, pandemic-enforced rules on Stamp Duty Land Tax which had been in place until 30 June 2021 in England and Northern Ireland. 

Until the end of June, the first £500,000 of a property purchase was exempt from stamp duty. This figure was subsequently cut to £250,000 from 1 July and will be reduced again, to £125,000, from 1 October 2021.

In Wales, the Land Transaction Tax holiday came to an end on the same day, with the exemption falling from £250,000 to its permanent level of £180,000.More information on stamp duty changes around the devolved nations can be found here.

UPDATE 19 July 2021 – Rightmove House Price Index

At-a-glance:

• Average price of properties coming to market at all-time high of £338,447
• Average price up by more than £21,000 since start of 2021
• Shortfall of 225,000 properties for sale

“Frenzied” UK housing market activity in the first half of 2021 pushed the average price of newly-listed properties to a record-breaking £338,447, according to the latest data from property portal Rightmove.

The firm said a record figure had been achieved in each of the past four months. The average property price is now £21,389 (6.7%) higher than at the start of 2021. 

In May to June 2021 alone, the average property price rose by £2,374. Rightmove said this was the largest increase recorded at this time of year since 2007. 

Rightmove added that the combination of 140,000 sales being agreed in the first half of 2021, plus 85,000 fewer listings compared with the long-term average, had produced a shortfall of 225,000 homes for sale.

Detached homes with four or more bedrooms have experienced the largest imbalance in terms of supply and demand since the start of 2021, with a 39% surge in sales but a 15% fall in numbers. 

Rightmove estimated that the average number of available properties for sale per estate agency branch is now at a record low of 16.

Tim Bannister, Rightmove’s director of property data, said: “New stamp duty deadlines in England and Wales for sales completed by the end of June helped to exhaust the stock of property for sale and concentrate activity.”

UPDATE 15 July 2021 – ONS UK House Price Index 

At-a-glance:

• Average UK property now worth just under £255,000
• Annual house price growth strongest in north west of England, sluggish in London
• Property transactions for May 2021 138% higher than a year earlier

The average price of a UK property was £254, 624 in May 2021, according to the UK House Price Index from the Office for National Statistics (ONS).

The ONS said that, on average, property prices had risen by 10% across the UK in the year to May 2021.

It added that the strongest house price growth over that period had been recorded in the north west of England with a return of 15.2%. London, meanwhile, recorded the most sluggish rise in annual growth returning a figure of just 5.2% in the year to May. 

According to the Bank of England, mortgage approvals stood at 87,500 for May 2021. The figure was up slightly from the previous month, but lower than the recent peak of 103,400 reported in November 2020.

Figures from UK Property Transaction Statistics estimated that 114,940 transactions on residential properties worth £40,000 had taken place in May 2021. This was a 138% increase in the figure recorded for the same month in 2020. 

UPDATE 7 July 2021 – Halifax UK House Price Index

Property prices fell in June for the first time since January, suggesting the UK housing market may be reacting to changes in the UK’s land tax regimes.

The average house price slipped to £260,358 last month, according to the latest data from the Halifax House Price Index. The figure was down 0.5% from the 14-year high of £261,642 recorded in May this year. 

However, the June figure is still £21,000 higher than it was at the same time last year – a year-on-year increase of 8.8%.

Halifax said the strongest regional growth over the past 12 months was recorded in Wales (12%), Northern Ireland (11.5%) and the north-west of England (11.5%).

Russell Galley at Halifax said: “With the Stamp Duty holiday now being phased out (in England and Northern Ireland), it was predicted the market might start to lose some early steam entering the latter half of the year. 

“It’s unlikely that those with mortgages approved in the early months of the summer expected to benefit from the maximum tax break, given the time needed to complete transactions.”

Forbes Advisor UK’s mortgage partner, broker Trussle, says there may still be time for people in certain English postcodes to complete their purchase before the final changes take effect on 30 September.

Between now and then, the Stamp Duty nil rate band stands at £250,000. It will revert to £125,000 from 1 October.

The holidays on the equivalent duties ended in Scotland on 31 March and in Wales on 30 June.

Miles Robinson at Trussle said: “While house prices have stalled month-on-month, it’s important to remember that annual growth remains strong. This is because prices have been driven by an imbalance between demand and supply for the past year.”

Nicky Stevenson at estate agents Fine & Country said: “The housing market has been running on rocket fuel for some time, but this is evidence that things may finally be starting to plateau. But there’s no suggestion we’re now facing a nosedive. Annual price rises across most of the UK remain impressive and make growth in previous years look rather mundane.”