Property Values Stall in Latest UK House Price Index

UK house prices increased by 9.5% in the year to September 2022, down from % in August 2022.

On a non-seasonally adjusted basis, average house prices in the UK had no change between August and September 2022, down from an increase of 3.0% during the same period a year earlier (August and September 2021).

The UK Property Transactions Statistics showed that in September 2022, on a seasonally adjusted basis, the estimated number of transactions of residential properties with a value of £40,000 or greater was 104,980.

This is 7.6% higher than a year ago (September 2021).

Between August and September2022, UK transactions increased by 1.1% on a seasonally adjusted basis.

House price growth was strongest in the South West where prices increased by 17% in the year to September 2022.

The lowest annual growth was in London, where prices increased by 8.3% in the year to September 2022.

England

In England, the September data shows on average, house prices have not changed since August 2022. The annual price rise of 9.6% takes the average property value to £314,278.

The regional data for England indicates that:

• the North West experienced the greatest monthly rise with an increase of 0.6%
• the North East saw the lowest annual price growth, with a movement of 5.8%
• the South West experienced the greatest annual price rise, up by 11.9%
• London saw the lowest annual price decrease, with a fall of –0.6%

Price change by region for England

Repossession sales by volume for England

The lowest number of repossession sales in May 2022 was in the East of England.

The highest number of repossession sales in May 2022 was in the North West.

Average price by property type for England

Funding and buyer status for England

Building status for England

London

London shows, on average, house prices have fallen by 0.6% since August 2022.

An annual price rise of 6.9% takes the average property value to £544,113.

Average price by property type for London

Funding and buyer status for London

Building status for London

Wales

Wales shows, on average, house prices have risen by 2% since August 2022.

An annual price rise of 12.9% takes the average property value to £223,798.

There were 6 repossession sales for Wales in May 2022.

Average price by property type for Wales

Funding and buyer status for Wales

Building status for Wales

Tom Bill, head of UK residential research at Knight Frank, comments:

“In a feat unlikely to be repeated in October, UK house prices were flat in September compared to the previous month.

Prices fell last month after the mini-Budget caused mortgage rates to spike but house prices are not necessarily now on a steeper downwards trajectory.

We expect mortgage rates to come down and a sense of stability to return as financial markets respond positively to the new government.

However, the lending landscape is shifting after 13 years of ultra-low borrowing costs, which we believe will put enough downwards pressure on prices so that they return to their summer 2021 level.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, comments:

“This most comprehensive of all the housing market surveys, though a little dated, confirms what we are seeing at the sharp end.

Prices continue to be supported by lack of stock as buyers seek to take advantage of competitive mortgage rates before fallout from the mini-Budget pushed them higher.

However, worries about further rises in inflation and potential implications arising from the Autumn Statement are contributing to a reduction in new business.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, comments:

“The uptick in inflation to 11.1 per cent will do nothing to calm borrower concerns about rising interest rates.

However, while Base Rate is expected to continue rising, the longer-term picture has changed and the peak is unlikely to be as high as recently feared.

Gilt yields have fallen, thereby allowing some cheaper mortgage products to be released into the market, which is encouraging for hard-pressed borrowers.

We expect fixed-rate mortgages to come down in price further as the cost of funds falls, servicing pressure subsides and lenders attempt to originate new business.”

Tomer Aboody, director of property lender MT Finance, comments:

“Month-on-month house price increases over the past 12 to 15 months have pushed values to record levels, fuelled by a combination of factors including cheap money, stamp duty savings and the need for space.

Detached and semi-detached houses have seen the biggest increases.

As we come to terms with a new world of expensive credit and cost of living, a slight reduction in house prices is expected although a crash isn’t guaranteed as many buyers are still looking to buy.

That, combined with less stock on the market, will keep prices steady.”

Avinav Nigam, cofounder of real estate investment platform, IMMO, comments:

“The annual growth rate reflects two things: a shortage of supply and long-term growth in demand.

This is the most reliable of house price data, since it reflects the whole of the market from official government figures.

However, it’s also the slowest of the house price indices, and as we are seeing, a lot can change in the space of weeks.

The impact of interest rate rises and political change will be reflected in future data sets.

A slowdown in house price growth and falls in some areas are expected.

This will be driven in particular by interest rate rises, affecting the circa two million property owners at or close to variable or standard rates on their mortgages.

The cost-of-living crisis will also constrain purchasing power for homeowners and investors alike.

House prices don’t tend to ‘crash’ in the way the stock market does, since housing, unlike stocks and shares, is essential for living.

However, it is likely that we see a pricing correction – a comedown from the heady double-digit growth house prices have experienced through lockdowns and beyond.

Ultimately, we still have a severe shortage of quality, energy efficient housing – both for sale and for rent. Our needs have not changed: we all still need a roof over our heads.

There is an opportunity for professional investors to step in and re-capitalise the market, upgrade the quality and energy performance of existing housing, benefitting the people and their communities who still need a place to call home.”

Commenting on the ONS House Price Index, Jean Jameson, Chief Sales Officer at Foxtons, said:

“In our local offices, we have seen more caution from our customers as they choose between buying an asset at a higher rate and dealing with record-breaking rent in the lettings market.

However, London is insulated by its international appeal, and house prices have remained high here.

As Help to Buy finished in October, our New Homes team have seen developers re-focus on the investor market, with increasing demand from overseas investors due to the exchange rate.

Foxtons Private Office, whose clientele includes domestic buyers in international business as well as international investors, have seen higher volumes of property going under offer this October than in 2021.”

CEO of Alliance Fund, Iain Crawford, comments:

“We’re yet to see any real signs of a notable drop in house prices despite a turbulent few months and now that the government has steadied the waters, any movement is likely to be a gradual return to normality rather than a sheer market crash.

Of course, tomorrow’s Autumn Budget could put the cat amongst the pigeons in this respect.

While it looks as though residential homeowners and buyers won’t feature directly, the nation is bracing for further tax hikes.

Any dent to our post tax income is likely to further impact our ability to borrow and buy, which will translate to an overall reduction in market sentiment.”

Director of Benham and Reeves, Marc von Grundherr, comments:

“The property market has continued to weather the storm of late and while we may have seen a reduction in buyer demand due to higher mortgage rates, we’re simply not seeing any downward pressure applied to sold prices, despite a static rate of growth on a monthly basis.

This is largely due to the fact that buyers have been keen to transact at pace in order to secure the rates currently on offer, before they climb even higher.

In doing so, they’ve helped to maintain a consistent level of activity in the process which has kept the market afloat.”

Managing Director of Barrows and Forrester, James Forrester, comments:

“It’s incredibly hard to gauge the true health of the UK property market at present, with increasing mortgage rates leading to a period of turmoil, followed by a renewed level of certainty as a result of a government refresh.

That said, there remains a large degree of economic instability and this week’s Autumn Budget may well add to this.

At the same time, we can expect two things come December. Mariah Carey in the music charts and the usual seasonal slowdown in property market activity.

As it stands, the property market remains resolute, but we will have a much clearer view of things come 2023.”

Managing Director of HBB Solutions, Chris Hodgkinson, comments:

“All current indicators suggest the market is starting to freeze over with homebuyers giving the idea of homeownership the cold shoulder following a sizeable uplift in the cost of borrowing.

This declining level of buyer demand is yet to cause house prices to actually fall, but the tide is starting to turn, and with the market now slowing right down until spring we can expect property values to follow suit sooner, rather than later.”