Long-awaited house price slow-down leaves market exposed

A slowdown in the rate of house price increase has been confirmed by the latest house price index from the Office of National Statistics.

Based on English, Scottish and Northern Ireland land registry figures for actual transactions, this puts UK average annual house price increase for the year to August at 13.6 per cent, down from 16 per cent in July 2022.

Part of the reason for the apparent slowdown is put down to the sharp increase in prices in August 2021 following changes in the stamp duty holiday.

‘The nation’s eyes may be firmly fixed on mortgage rates and house prices, but it’s important to note that renters are in for a tough time, too’, said Flatfair chief executive Gary Wright.

‘Indeed, while we’re likely not seeing the full effect reflected in the data yet, higher interest rates for buy to let investors will likely be passed on to their tenants.

‘With private landlords pulling out of the market due to increased costs and regulation, renters are faced with lower supply and higher demand – a perfect storm for rent costs.

‘The government seems preoccupied with its own internal crises, but any long-term strategy looking to ease the burden on renters needs to include reform of the traditional five-week deposit system. The average Londoner now needs to find £2,765 – this is simply unsustainable in the midst of a cost of living crisis’.

Meanwhile iBuyer Upstix chief executive Phil Tennant said that while the full effects of recent economic developments had yet to filter into the statistics, the prospect of turbulence around the corner won’t be welcomed by those who were considering a purchase or sale in the near future.

‘The volume of broken chains, already a problem in the UK, will only get worse if people can no longer afford to sell up and move up the housing ladder thanks to the rising costs of a mortgage, or in the case of many young people, be able to even get their foot on the first rung.

‘Some chains break for unavoidable reasons of course. Buying or selling a home is a big decision, and many will have second thoughts. But it’s clear that there are deep-rooted problems in our property market that need to be addressed swiftly, especially in light of the current market turmoil. At the very least, there should be more options available to those moving home beyond the traditional mode’.

Landmark Information Group’s divisional director of growth Mike Holden also pointed to continuing uncertainty in the property market caused by Liz Truss stepping down. ‘Whilst it is too early to say what impact the resignation will have on the property market, it’s positive that any immediate period of uncertainty won’t drag on as we saw last summer.

‘We’re still seeing strong demand from people wanting to move and the initial rallying of the markets in response to the news could help further consumer confidence. However, there is no denying that this is still a hugely uncertain time for the market – investors and home-movers alike will be watching with keen interest any new housing policies implemented by a new cabinet. What we urgently need now is clarity on the direction of travel for the UK’s home-moving market – and this will only come with a sustained period of stability’.