Average house prices in the UK lost pace slightly in August, Halifax says, slowing from 11.8% growth in July to 11.5%.
This is the slowest annual rise recorded by the lender in three months.
With prices rising 0.4% on a monthly basis, this puts the average property price at £294,260.
Of all regions, Wales saw the fastest rise during the summer month, at 16.1%, with the South West of England not far behind, at 14.5%.
Halifax mortgages director Kim Kinnaird says that things may not continue in this manner: “While house prices have so far proved to be resilient in the face of growing economic uncertainty, industry surveys point towards cooling expectations across the majority of UK regions, as buyer demand eases, and other forward-looking indicators also imply a likely slowdown in market activity.”
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Finanze chief economist Edgar Rayo sees a similar outcome. He says: “Liz Truss’ proposed tax cuts to stimulate the economy will most likely see interest rates rise further and affect millions of existing and prospective borrowers during what’s predicted to be a severe and protracted recession.
“Although the Bank of England denies speculations from analysts that interest rates will hit the same level seen during the early 80s, the new prime minister’s strategy has serious implications for the mortgage market, since it will likely compel Threadneedle street to hike its benchmark interest rate closer to the 3.25% threshold in 2023.
“This will mean higher payments for those not locked into longer fixed-term mortgages, which shield them from interest rate hikes. Truss’s expansionary measures are designed for a short-term GDP and productivity boost, but their impact on property prices could be profound.”
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Hargraves Lansdown senior personal finance analyst Sarah Coles adds: “As we go through the rest of the year, higher interest rates and runaway inflation are only going to make life harder.
“However, we won’t see annual house price rises fall in a straight line. This is partly because of the echoes of the stamp duty holiday last year which created really lumpy price changes a year ago. However, it’s also because the property market is driven to a huge extent by sentiment, and right now, that’s a bit of a rollercoaster ride.”
And Jamie Thompson Mortgages broker Jamie Thompson says: “There’s no such thing as a buyers’ market in the UK. I don’t think there ever will be again.
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“The only way to tip the balance back towards buyers and away from existing owners who are now sat on eye-watering amounts of equity in their property it to build more homes and we’re not doing that.
“I’m doing mortgages at the moment for people who bought their first house just two years ago placing down 5% and 10% deposits who now have so much equity they are moving up from small starter homes to detached family homes.
“Lenders’ criteria are getting more lax by the day with Nationwide extending the 5.5 times income limit to existing customers, not just first-time buyers with higher incomes, and Halifax and Accord are also increasing the maximum borrowing amount for many borrowers. As the banks allow buyers to borrow more they will increase their bids and house prices will remain high. It’s simple economics.”
By Gary Adams
Source: Mortgage Finance Gazette