Post-holiday comedown isn’t too depressing for house prices
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, comments on the ONS House Price Index and Land Registry House Price Index, showing post-holiday comedown isn’t too depressing for house prices.
Key points from publications:
- Average house prices were up 10.2% in the year to October, down from 12.3% a month earlier.
- The average house price fell back slightly from a record £271,000 to £268,000.
- Average prices are up £24,000 in a year.
- House prices in London were still the highest in the UK, at£516,000.
- Prices in the East Midlands saw the highest annual growth at 11.7%, while London saw the lowest annual growth of 6.2%.
- Prices in the North East remain the lowest in the country, at an average of £148,000.
- Detached house prices were up 14%, while flats were up 6.6%. This is a reversal of figures released for November by Halifax last week. ONS figures are more comprehensive, but Halifax figures are newer.
- New-build prices were up 18%, compared with 9.2% for existing properties.
Sarah Coles said:
“The post-stamp-duty-holiday comedown hasn’t been too depressing for house prices. When the tax break finished at the end of September, prices fell slightly from their record high, but they’re still well above their previous June highs. And while we’re likely to see rises continuing to slow over the coming months, there will still be structural pressures in the market keeping a floor under prices.
“The race for space isn’t over yet, with detached property prices soaring and homes outside London rising faster than those within. And while people are still reconsidering how and where they work, prices for these properties will keep rising.
“Low mortgage rates are also boosting demand, and although we’ve seen rates rise recently, you can still get a five-year fixed-rate mortgage for less than 1.5%, and a three-year deal for less than 1% if you’re remortgaging. At these levels, it makes monthly payments far more affordable.
“Lockdown savings also play their part, with more people being able to find bigger deposits, and more able to afford the horrible cost of moving home without having to borrow. Meanwhile, the property drought continues, and the shortage of homes on the market means more buyers chasing fewer houses, which will keep prices up.
“The great unknown is what happens to interest rates. Rising inflation and positive job numbers mean there’s every chance they will end 2022 higher than they are now. However, sluggish growth and worries about the rise of Omicron mean we’re not going to get runaway rate hikes, for fear of damaging the fragile economy. Instead, any rate rises are likely to be slow and steady, which is unlikely to send panic through the property market.”
Kindly shared by Hargreaves Lansdown
Main photo courtesy of Pixabay
