Office for National Statistics figures for September showed that house prices were unchanged in September on August at an average £295,000, which equated to a 0.1% seasonally adjusted month-on-month rise.
Given the large rise seen in
the same period last year, when the temporary stamp duty holiday was coming to
an end, the flat growth this year meant the year-on-year price growth fell from
13.1% in August to just 9.5% in September.
This compares to official CPI
inflation for September of 10.1% - meaning the value of homes actually
marginally depreciated over the year to September, compared to the rest of the
economy.
The figures were announced as
the ONS also released updated inflation numbers for October showing that CPI
inflation has been pushed even higher, to 11.1%, in October. Within this, the
ONS said the cost of “housing and household services” rose 11.7% in the year to
October – the highest figure on record since this metric was first modelled in
1950.
The ONS’s House Price Index
is based on real house sales data compiled by the Land Registry, rather than
data from mortgage lenders, which comes from agreed sales.
The house price figures cover
the period of the queen’s death and mourning period, and the mini budget and
the following week. Housebuilders have
reported declining sales since then, and mortgage
lenders have reported month-on-month declines in prices in
October, with predictions
of deeper price falls next year.
Since the mini-budget,
average two- and five-year fixed rate mortgage rates have climbed above 6%, the highest for 14 years. The Bank of England put the base rate up to 3% at the start of the month,
sparking concern mortgage rates would remain high and that the “era of low
interest was over”.
The ONS said transactions in
September were provisionally expected to be 37% lower than the same month last
year, at 103,930. It said: “It is likely that 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 September 2021.”
The ONS said the South west
saw the biggest year-on-year increase in prices, at 11.9%, with the East
midlands, East, South east and West midlands all likewise seeing increases of
more than 10%. However, it said the North east has now replaced London as the
region of England with the lowest growth, falling to just 5.8% annual growth,
with London prices now growing by nearly 7%.
Lawrence Bowles, Savills
residential research director, said the data showed that house price rises have
started to level off across the country. He said: “With mortgage affordability
so stretched, we are likely to see sales volumes in the mainstream housing
market slow over the rest of the year.
“We’ve forecast average price
falls of -10% in 2023, with values recovering through 2024 and beyond as
mortgage rates fall back to more affordable levels, though the less
mortgage-dependent prime markets – broadly the top 5% to 10% by value – will be
less impacted.”
Iain McKenzie, CEO of The
Guild of Property Professionals, said: “The next few months are going to be
critical for the property industry. Measures are being taken by the government
and the Bank of England to bring down inflation, and although this is currently
resulting in the rise of interest rates and mortgage payments, the
cost-of-living crisis must be brought under control.”
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November 2022