House price growth slows in August: ONS

The latest figures from the Office for National Statistics (ONS) has shown that average house prices in the UK grew 13.6% in the year to August - down from the 16.0% in July.

While prices continue to increase, year-on-year growth has slowed - which the ONS has attributed to the sharp rise in house prices seen in August 2021 following the stamp duty changes.

This means the average house price in August 2022 was £292,000 - £36,000 higher than the same time last year.

Kate Davies, executive director at IMLA, comments:

“Today’s data should reassure homeowners of the resilience of the housing market, with prices remaining high. Having said this, there are numerous predictions that point to a decrease in prices in the coming months. The current cost of living crisis, along with record petrol and energy prices, rising inflation and tax rises mean most households are wary of moving up the ladder, putting a dampener on the extreme house price growth seen in recent years.

“While there have been recent talks of a ‘crash’ in the media, there is certainly no need to panic – property is a long-term investment and prices have always risen after short-term falls.

“However, housing supply still remains a pertinent issue, and something that the new Government needs to set out a clear plan to address. Housebuilding is still well below the set figure of 300,000 a year that is needed to meet demand. The Government made it very clear that it had no intention of prolonging the Help to Buy scheme, which closes to new applicants at the end of this month, but the alternative schemes which have been developing to replace it cannot match the volume of demand.  The added burdens and challenges on first-time buyers which have become evident over the past few months and weeks are going to require fresh Government thinking on how to help FTBs and how to kick-start new-build.”

Simon McCulloch, chief commercial & growth officer at Smoove said:

“August’s slowdown in house price growth will have been a slight relief for first-time buyers. However, with inflation still rising, price growth still remains very high in the double digits. Fast forward to today and the recent political instability, alongside market volatility and high interest rates, means first-time buyer affordability is even more squeezed. It will be interesting to see if there is a further dip in next month’s figures. The stamp duty tax cut being maintained though should help provide some reassurance and encourage those who are still able to move to do so. A shortage of housing market stock will also continue to underpin house prices.”

Paul McGerrigan of Loan.co.uk said:

“This year so far has been an exceptional time for the property market which has shown extraordinary resilience despite extremely challenging financial times.

“August’s monthly house price increase of 0.9% per cent, a leap of 13.6% per cent over the year, indicates the market has still not topped-out which is incredible.

“A dearth of supply, the continued trend toward remote working and a burgeoning BTL market, for now, still outweighing the negative factors of inflation, rising mortgage rates and uncertainty.

“High inflation will continue for the foreseeable, prompting a string of interest rate hikes by the Bank of England’s Monetary Policy Committee, which may eventually deter property-hunters and put a brake on price growth, but for now buyers’ desires are the stronger factor.

“With the changing market, the role of mortgage brokers is ever more vital to assist those seeking to enter the market or climb the property ladder.”