According to data from the Office for National Statistics (ONS), annual growth was slower than the 16 per cent recorded in July, which the ONS attributed to the “sharp rise” in house prices in August 2021 following changes made to the stamp duty holiday.
House prices are £31,659 higher than they were this time last year. Monthly growth stood at 0.9 per cent.
Jeremy Leaf, north London estate agent and a former Royal Institute of Chartered Surveyors (RICS) residential chairman, said the historic figures showed the strength of the market before turbulence hit in September.
He added: “Since then, activity has slowed and prices have softened a little but there is still plenty of pent-up demand, not least to take advantage of favourable existing mortgage rates before they rise even higher.
“Fortunately, most sellers are recognising the importance of negotiating bearing in mind rising inflation, which is making it particularly difficult for first-time buyers or those seeking larger loans.”
Housing market resilient…for now
Kate Davies, executive director of Intermediary Mortgage Lenders Association (IMLA), added the data displayed the “resilience” of the housing market but noted there were predictions of a decrease in prices in coming months.
“The current cost of living crisis, along with record petrol and energy prices, rising inflation and tax rises mean most households are wary of moving up the ladder, putting a dampener on the extreme house price growth seen in recent years.
“While there have been recent talks of a ‘crash’ in the media, there is certainly no need to panic – property is a long-term investment and prices have always risen after short-term falls,” she added.
Working on registry delays
HM Land Registry (HMLR) said its priority was to reduce delays associated with registering a property and said to address this, it was introducing automation as well as recruiting and training 500 new employees.
It said: “As a result of HMLR increasing, the level of automation in the way they process applications, initial transaction numbers may be lower than pre-coronavirus pandemic volumes; however, in the medium to long term, this will lead to higher volumes being processed.”
Regional and buyer overview
In England, house prices have risen by one per cent since July and 14.3 per cent annually to reach £315,965. Properties in the East Midlands saw the largest rise in price with a 16.9 per cent increase to £255,114. The region also saw the biggest monthly uptick, with a 2.3 per cent jump in prices since July.
The West Midlands was the only region to record a decline in house prices, with a -0.2 per cent monthly fall to £255,202. However, it recorded a 13.9 per cent yearly rise.
In Wales, house prices have risen by 0.2 per cent since July and 14.6 per cent since last year to an average of £220,059.
Average house prices in Scotland rose to a record level of £195,000, representing a 9.7 per cent yearly increase. In Northern Ireland, house prices went up by 9.6 per cent in the year to Q2 to reach £169,000.
Former homeowners paid £362,680 on average for a house in August, a 14.6 per cent annual rise. First-time buyers saw average prices rise by 14 per cent to £262,022.
‘Market couldn’t be tougher for FTBs’
James Turford, co-founder and COO of Even, said: “House prices have been defying gravity for months in the face of rising interest rates, exacerbating affordability issues for first-time buyers. Given the eye-watering levels prices have reached, news of some softening will come as scant comfort for those stuck renting.
“And with real-terms wages falling, sky-high inflation and soaring mortgage rates, the market couldn’t be much tougher for first-time buyers.”
He said the stamp duty cut would not make things easier as it would “support property values rather than first-time buyers”.
“Now would be the time to extend more targeted support for the first-time buyer market. Instead we’re seeing the end of Help To Buy this month, leaving the private sector to pick up the pieces,” he added.
Lewis Shaw, founder of Shaw Financial Services, said: “Even with the stamp duty cut, most first-time buyers were already exempt from that tax and are facing the highest rates. If first-time buyers can’t afford the mortgage payments, they won’t buy. Given that first-time buyers are the oil that keeps the machine turning, the property market begins to seize if they dry up. This all points to a change of direction from a seller’s to a buyer’s market.
“Add in the glut of buy-to-let properties about to hit the property portals as landlords decide the game is up, and you’ve got all the ingredients for a property crash.”
Lack of stock will prevent a crash
Ian Hewett, founder of The Bearded Mortgage Broker said he did not believe there would be a price crash in the property market.
He added: “Yes, mortgage rates have increased dramatically, and energy bills have gone through the roof, so affordability is going to be a challenge. However, the extreme lack of stock will likely prevent a crash even if demand drops off sharply.”
Paresh Raja, CEO of Market Financial Solutions, said property purchase demand would dip because of rising rates, “but limited supply will ensure enough competition in the market to keep prices stable, if not growing”.
He also said the stamp duty cut would “keep the market buoyant”.
