Annual house price growth slows but remains in double digits: Nationwide

Prices rose by 0.8% month-on-month, after taking account of seasonal effects – the thirteenth successive monthly increase. In the past two years, the average house price has increased by almost £50,000.

Robert Gardner, Nationwide's chief economist, said: “There are signs that the housing market is losing some momentum, with surveyors reporting fewer new buyer enquiries in recent months and the number of mortgage approvals for house purchases falling below pre-pandemic levels. However, the slowdown to date has been modest, and combined with a shortage of stock on the market, has meant that price growth has remained firm.

“We expect the market to slow further as pressure on household budgets intensifies in the coming quarters, with inflation set remain in double digits into next year. Moreover, the Bank of England is widely expected to continue raising interest rates, which will also exert a cooling impact on the market if this feeds through to mortgage rates, which have already increased noticeably in recent months."

James Briggs, head of intermediary sales at Together, commented: “House prices defied expectations to increase by 0.8% month-on-month in August 2022 and 10% compared to August 2021, despite financial belt-tightening across the UK.

“But this trend can’t continue for much longer, and a drop is to be expected soon as the country braces itself for a tough winter ahead, with double digit inflation sending fuel bills spiralling. The threat of a recession is also likely to dampen consumer confidence. Pressure to secure a quick sale before the housing market cools may also be a factor, as sellers decrease prices to secure a buyer.

“While this may benefit first-time buyers who can take advantage of a price drop and secure a mortgage now, many homeowners who were looking to move and upgrade their homes may now want to stay put, as they focus on remortgaging or consolidating unsecured debts to avoid going into payment shock as interest rates and inflation continue to rise.”

Tomer Aboody, director of MT Finance, added: "With less stock on the market and therefore lower transaction volumes, these price rises are not surprising as buyers have little choice and are therefore outbidding to secure a home.

"However, while a few months ago these bids were above asking price, buyers now are more cautious due to rising rates and costs so are bidding around or below asking price, taking into consideration any work required and therefore delays in material and higher building costs.

"With energy prices rocketing, an energy-efficient home will be higher up the pecking order on buyer’s wish lists, especially as lenders will be looking to reward borrowers on being more efficient by offering lower rates."