House price growth back in double figures – but not for long
Average house prices were up 12.6% in the year to October. This is up from 9.9% in the year to September, but down from the peak of 14.8% in the year to July.
The average house price hit a record of £296,000: £33,000 higher than a year earlier. Average prices rose 0.3% between September and October.
ONS House price data for October was released today: UK House Price Index October 2022 – Office for National Statistics (ons.gov.uk)
Land registry data for October was also published: UK House Price Index: reports – GOV.UK (www.gov.uk)
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown said: “House price rises bounced back in October, but this isn’t quite what it seems. It owes an awful lot to the fact that at the same time a year earlier average house prices actually fell £6,000 in the month after the stamp duty holiday finally came to an end. In reality, house prices were up just 0.3% between September and October. And this is also a snapshot of the relatively halcyon days, before the chaos of the mini-budget brought confidence in property prices crashing down around our ears.
“October’s figures reflect conflicting forces in the market in August – when most of these sales were agreed. On the downside, buyer demand and agreed sales had been falling for a few months, and started to drop faster. The RICS residential survey reflected growing concern that the downward trends were gathering pace. This owed much to rising prices – with inflation at 9.9%, and to gradually rising borrowing costs, with the average mortgage rate rising 22 basis points during the month to 2.55% (Bank of England).
“Meanwhile, however, the mortgage market was enjoying what turned out to be a last hurrah, so that after months of dwindling mortgage approvals, they rose sharply again during the month – to their highest point since January.
“Of course, what came next would be devastating, with chaos unleashed in the mortgage market in September, which kicked off a catastrophic loss of confidence. And while mortgage rates are dropping back from their peaks, it’s too late to put the genie back inside the bottle, and the property market is paying the price. This may not start to impact figures for another couple of months, but at that point we’ll start to see far less rosy growth data.
“Anyone who is agonising over whether to buy now or wait for prices to fall has a difficult few months ahead of them. If they take the plunge, there’s a risk they may be over-stretching themselves for a property that’s likely to lose value, and risks leaving anyone with a very modest deposit in negative equity. If they stay put, they either have to live somewhere they’ve outgrown or pay ever-increasing rent. And meanwhile they have no guarantees over when prices will fall, how far they will drop in the area where they want to buy, and whether they’ll be able to time the purchase right to take advantage of property price falls.”