UK House Prices Rising at Fastest Rate for Eight Months
According to Halifax, one of the UK’s biggest mortgage lenders, house prices are growing at their fastest pace since February. This leaves the average home costing £225,109, which is a 4% rise for the year.
The news will be welcome to many homeowners, who were previously facing reports of a declining housing market around the UK and especially in London. This is thought to be fuelled by uncertainty following Brexit and a spending slowdown. Halifax commented saying that lower spending as well as climbing prices could threaten future demand but maintained that the market should not be detrimentally affected by the proposed interest rate rise by the Bank of England.
Managing director of Halifax Community Bank Russel Galley said “While the quarterly and annual rates of house price growth have improved, they are lower than at the start of the year.
“UK house prices continue to be supported by an ongoing shortage of properties for sale and solid growth in full-time employment. However, increasing pressure on spending power and continuing affordability concerns may well dampen buyer demand. There has been recent speculation on the possibility of a rise in the Bank of England base rate. We do not anticipate this will have a significant effect on transaction volumes,” he said.
However, some have doubted the new figures, which appear to contradict those from Nationwide and Rightmove. Chief UK economist at Pantheon Macroeconomics Samuel Tombs said the rise in price was “impossible to reconcile with all the other housing market evidence”.
He went on to mention that other studies suggest weaker demand with a declining number of potential buyers in the last 6 months.
“Real wages still have further to fall over the next six months and mortgage rates will rise soon,” he said.
Nationwide has recently pointed at a slowdown in the London property market, with prices achieving the lowest growth for 4 years in September. The growth in other parts of the country is being aided by the declining market of properties in London according to Jonathan Hopper, managing director for Garrington Property Finders.
He said: “momentum remains patchy and what growth there is is wavering rather than sustained, and prices remain under intense pressure in several key regions.
“In London, prices have been sliding in many of the areas that saw the frothiest rates of growth during the boom.
“On the flipside, the flight of equity from the capital is fuelling activity in several regional markets where affordability and perceived value for money is now enticing higher volumes of buyers.”
Some market experts believe that growth will decrease in coming months, the founder director of the estate agent James Pendleton, Lucy Pendleton said “The back-to-school bounce in September is likely the cause of this substantial rebound in growth.
“It is an annual trend which sees a backlog of transactions brokered in the summer months complete in September once everyone comes back from holiday. What that often means is that the prices attached to those transactions reflect where the market was much earlier in the year, when prices were higher.
“You would think this data would instil much more confidence among sellers but actually this seasonal distortion is quite misleading and you could see price growth soften just as quickly in the coming months.”