Annual house price growth slows to single digits: Nationwide

Growth slowed to 9.5% in September, from 10% in August, with 10 of the UK’s 13 regions recording slower annual price growth in the third quarter of the year.

The South West remained the strongest performing region, even though it saw a slowing in annual house price growth to 12.5%, from 14.7% in Q2. This was closely followed by the East Midlands, which saw annual price growth pick up to 12.3%, from 11.4% in the previous quarter.

Wales saw annual price growth slow to 12.1% but remained the top performing nation. Price growth in Northern Ireland softened to 10.1%. Meanwhile, Scotland saw a further slowdown in annual growth to 7.8%, compared with 9.5% last quarter.

England saw a further slowing in annual house price growth in Q3 to 9.9%, from 10.7% in Q2. While the South West remained the strongest performing region, southern England continued to see weaker growth overall than northern England.

Within northern England, the East Midlands was the strongest performing region with price growth picking up to 12.3% year-on-year, from 11.4% in the second quarter.

London remained the weakest performing UK region, although did see a modest pickup in annual price growth to 6.7%, from 6.0% last quarter.

Robert Gardner, Nationwide's chief economist, said: “In September, annual house price growth slowed to single digits for the first time since October last year although, at 9.5%, the pace of increase remained robust. Prices were unchanged over the month from August, after taking account of seasonal effects. This is the first month not to record a sequential rise since July 2021.

“There have been further signs of a slowdown in the market over the past month, with the number of mortgages approved for house purchase remaining below pre-pandemic levels and surveyors reporting a decline in new buyer enquiries. Nevertheless, the slowdown to date has been modest and, combined with a shortage of stock on the market, this has meant that price growth has remained firm.

“By lowering transaction costs, the reduction in stamp duty may provide some support to activity and prices, as will the strength of the labour market, assuming it persists, with the unemployment rate at its lowest level since the early 1970s.

“However, headwinds are growing stronger suggesting the market will slow further in the months ahead. High inflation is exerting significant pressure on household budgets with consumer confidence declining to all-time lows.

“Housing affordability is becoming more stretched. Deposit requirements remain a major barrier, with a 10% deposit on a typical first-time buyer property equivalent to almost 60% of annual gross earnings – an all-time high.

“Moreover, the significant increase in prices in recent years. together with the significant increase in mortgage rates since the start of the year. have pushed the typical mortgage payment as a share of take-home pay well above the long-run average."

Guy Harrington, CEO of residential lender Glenhawk, commented: “The decade long house price growth party is over. If we do indeed see rates anywhere near the 6% that the markets are pricing in, the only outcome is a housing market crash. The BoE’s misguided obsession with crushing inflation has left an overpriced housing market at the mercy of the banks. Only a rapid unwinding of rates when the true scale of consumer headwinds becomes apparent this winter will prevent a prolonged period of turmoil for homeowners.”

Jonathan Hopper, CEO of Garrington Property Finders, said: “So far they’re twitches rather than tremors. But the formerly boundless confidence and momentum of the property market are being shaken.

“You’d barely know it to look at the headline figures of today’s Nationwide data. In ordinary times, an annual price rise of 9.5% would be seen as a sign of rude health, and for most of the past year this has been the case.

“But one week on from the mini-Budget, the market is reeling as hundreds of mortgage products are withdrawn and interest rates are ratcheted up.

“The Chancellor’s cut in Stamp Duty is welcome, but its impact will be negated by the rising cost of borrowing. The simple truth is that mortgage costs and sentiment play a far bigger role than Stamp Duty in a would-be buyer’s decision-making process.

“The coming months are likely to see price inflation cool, and this trend at least has been picked up by the Nationwide’s data. It found that on a month-on-month basis, price rises slowed to zero in September, following a 0.7% increase in August.

“For now, buyer demand still exceeds the supply of homes for sale, and this is propping up prices. Yet the dynamics are shifting, and increasing numbers of buyers are either pausing for thought or playing hardball on what they’re willing to pay.

“We’ve moving into a buyer’s market, but with millions of people due to see their energy bills jump tomorrow and confidence becoming more brittle by the day, the open question is how many buyers there will be in coming months.”

Andrew Montlake, managing director of Coreco, added: “The days of double-digit growth may not return for a long time. The level of uncertainty in markets, and being felt by consumers, is off the charts. The brief surge in sentiment caused by the stamp duty announcement on Friday has been wiped out by the tsunami of market volatility since. There's no doubt now that a lot of prospective buyers will either have to look at smaller homes due to the sharply increased mortgage rates they are now looking at, or will shelve their plans altogether and wait until there is more clarity and things have calmed down. Prices will without doubt come under real pressure now, but the sizeable drops some have predicted are unrealistic given the lack of supply. Prices are far more likely to flatline than go through the floor. What we can all agree on is that the age of dirt cheap money is well and truly over."