UK house price growth stalls
By Abigail Townsend
Date: Wednesday 16 Nov 2022
(Sharecast News) - UK house price growth slowed sharply in September, official data showed on Wednesday, adding to the deepening economic gloom.
According to the Office for National Statistics, UK average house prices increased by 9.5% over the year to September, down from 13.1% in August and a high of 15.2% in July.
Between August and September house prices were unchanged on an unadjusted basis, the first time they have stalled on a monthly basis since October 2021. On a seasonally adjusted basis they nudged 0.1% higher.
The average price of a house in the UK was £295,000, unchanged on August and £26,000 higher than September 2021.
The housing market has been supported so far this year by a sharp imbalance in supply and demand. But recent industry surveys are indicating a slowdown, as the cost of living crisis starts to bite. Inflation now stands at 11.1%, a 41-year high, and interest rates have risen to 3% from 0.25% in December.
Tough comparables also played a part in the data, however, after prices rose sharply in September 2021 following changes to Stamp Duty Land Tax.
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: "September's official data suggest house prices have stalled in the face of surging mortgage rates. It was inevitable that house prices eventually would succumb to the huge jump in mortgages rates this year: indeed, timelier data suggest that house prices are now firmly falling.
"Admittedly mortgage rates should come down from the very high levels seen in October. But even on our below-consensus forecast for the Monetary Policy Committee to stop raising the bank rate once it has reached 4.0%, the average quoted rate for two-year fixed mortgage will still be about 5.3% next spring, up sharply from 1.6% at the end of 2021."
Mortgage rates spiked in October in response to then-chancellor Kwasi Kwarteng's financial statement, which unnerved markets by including £45bn of unfunded tax cuts but no spending plans or economic forecasts. Jeremy Hunt has abandoned nearly all of the planned measures since taking over from Kwarteng.
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