Habito comments on the House Price Index and Consumer Price Inflation
Following the release of the UK House Price Index this morning, revealing that the average UK house price has increased by 11.8% over the year, and the Consumer Price Inflation report revealing that inflation has hit a near 10-year high of 4.2%, Habito comments on what this means for homeowners.
Martijn van der Heijden, CFO at award-winning mortgage broker, lender and digital home-buying service Habito, said:
“UK average house prices increased by 11.8% over the year to September 2021 – a record high of £270,000, or a huge £28,000 higher than prices the previous September. This ONS data reflects the last month of the Stamp Duty Holiday lower threshold, and we can see the full impact it had on the market over the 12 months.
“To put this incredible one-year price rise into more context, £28,000 would be the take-home salary post-tax, of someone earning £36,000 (more than the UK average salary which is £31,461).
“While some house-hunters might be hoping that house prices will slip back down to pre-pandemic levels without the benefit of the tax holiday, unfortunately this might not be the case.
“One reason house prices remain inflated is the low cost of borrowing, with mortgages available at still historically cheap rates. However, since last month we have seen banks and lenders start to increase their rates, albeit slightly.
“The Consumer Price Inflation report this morning, revealed that inflation has hit a near 10-year high of 4.2%. Meaning that interest rates could change as soon as next month, as the Bank of England faces more pressure to raise the base rate and get a firmer grip on this increasing inflation. Mortgage becoming more expensive, is likely to lower the demand for buying homes and have a cooling impact on house prices in 2022.
“We’re seeing our customers continue to move away from two-year fixed mortgages to longer-term fixed rate mortgages, including our “fixed for life” Habito One mortgage. From speaking to customers we know that they are wise to the real possibility of rising interest rates by the time they remortgage again in the future.
“The ONS data also clearly shows, there is no such thing as a ‘national property market’. It’s important to note that price growth varies wildly from region to region and for different property types. In the North West, price growth climbed to a headline-grabbing 16.8% but that’s from a lower base than the national average, with house prices reaching £203,661, on average. Meanwhile, London continues to be the region with the lowest annual growth (2.8%) for the tenth consecutive month, but the homes there are the most expensive in the country at £507,000.”
Kindly shared by Habito
Main photo courtesy of Pixabay
