UK HPI: House price growth flatlines in August

The latest figures released by ONS this morning have revealed that the traditionally quieter summer housing market lived up to its reputation with a fractional rise in the price of a typical UK home.

Related topics:  house prices,  UK HPI,  ONS
Property | Reporter
18th October 2023
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"With higher interest rates largely priced in, sellers are having to be more competitive with their property pricing in order to stimulate buyer demand"
- Guy Gittins - Foxtons

Albeit slightly historic, the latest data released by ONS has shown that during August the average price of a property in the UK was £291,000 - no change from this time last year, but £9,000 above the recent trough in March 2023.

This was down from 0.7% (revised estimate) in the 12 months to July 2023 and lower than the average UK house price annual inflation of 0.2% (provisional estimate) in the 12 months to August 2023.

The fastest growing region was the North East, with an annual percentage change of 3.6% in the 12 months to August 2023. The lowest annual percentage change was in the East of England, where prices decreased by 1.6% in the 12 months to August 2023.

On a non-seasonally adjusted basis, average house prices in England increased by 0.2% between July 2023 and August 2023, compared with an increase of 0.9% during the same period 12 months ago. On a seasonally adjusted basis, average house prices in England increased by 0.1% between July 2023 and August 2023.

Malcolm Webb FRICS, Technical Director, Legal & General Surveying Services, comments:

“The Bank of England’s decision to hold the base rate at 5.25% last month has offered fresh hope for new buyers and those looking to remortgage. As the first pause in the rate-rising cycle since late 2021, it has had a significant impact on the pricing of fixed rates and market sentiment.

"The market has responded positively, with swap rates (which largely dictate the pricing of mortgage products) remaining stable, and fixed rates repriced downwards as a result. Some lenders have also responded by introducing new and innovative offerings, with the number of mortgage products available on the market climbing to over 2,500 this month.

“It is important that anyone encouraged by stabilising house prices and interest rates understands that seeking expert guidance from a qualified adviser and surveyor are important part of their homebuying journey.

"While a mortgage adviser has a whole-of-market view and access to exclusive products, a surveyor can identify hidden issues with your potential home (like dry rot or problems with the roof) which could be expensive issues later down the line. Not only does a survey reassure you in what is likely to be the most significant purchase of your life, but it also gives you the opportunity to negotiate the asking price, ensuring you buy wisely.”

Guy Gittins, Foxtons CEO, comments: "Positively, the shock of the mini-budget felt this time last year seems to have largely dissipated, and buyer sentiment is holding up despite the challenging macroeconomic backdrop.

"But with higher interest rates largely priced in, sellers are having to be more competitive with their property pricing in order to stimulate buyer demand; this puts buyers in the driving seat when it comes to negotiations, but sellers that adjust their pricing accordingly are successfully transacting. At Foxtons, we’ve seen a higher volume of new sales agreed as a result."

Nathan Emerson, CEO of Propertymark comments:

“This drop in house price is no surprise, is needed and should not be seen as a negative. This slowing is playing a crucial part in combatting interest rates and improving homebuyers’ affordability.”

Matt Thompson, head of sales at Chestertons, says: “In August, buyers were adopting a more strategic property search by adjusting their budget or widening their search criteria to find a suitable home. Although some buyers took a break during the August holidays, others utilised the month to enter price negotiations or seal the deal by signing contracts.

“Chestertons sold 5% more properties in August compared to July and registered more new buyers, suggesting that house hunters had digested the higher mortgage rates at the time and were taking advantage of the slower sales market.”

Matt Surridge, Sales Director at MPowered Mortgages, comments: "Falling house growth is no longer possible to ignore and represents the consumer response to higher borrowing costs and rising inflation. This trend is particularly concerning, as while these figures are from August, we are not seeing the same seasonal pickup in demand that we would expect at the start of Q4.

"Hopefully we will see a levelling of house prices shortly, supported by falling mortgage rates and product innovation. MPowered reduced its rates on four separate occasions in September, demonstrating its commitment to making the mortgage processes as affordable for consumers as possible. MPowered continues to use Al to speed up the mortgage process providing the tools for brokers to give first-time buyers increased certainty and control to find a product that suits them at this time."

Tom Bill, head of UK residential research at Knight Frank, said: “The seasonal rise in housing market activity was marginal this autumn, buyers as sellers failed to see a light at the end of the tunnel for high-interest rates.

"The Bank of England’s struggle to contain inflation over the last 18 months has undermined sentiment, that vital lubricant in the UK housing market. While mortgage rates have stabilised, house prices will continue to come under pressure as monthly mortgage costs rise sharply.

"That said, we think most of the price correction will happen this year and demand will strengthen in 2024 as economic sentiment improves. Activity may stutter ahead of next year’s general election but modest single-digit annual growth should return from 2025.”

Alex Lyle, director of Richmond estate agency Antony Roberts, says: "These numbers reflect what was happening in August and while we would expect a lull in the summer months with low activity, we’ve found that the housing market is not as exciting this autumn as it was in the spring.

"The market is not as busy as it should be and while viewings have picked up, new stock must be at the right price or there isn’t the depth of demand for it. Typically, we are seeing two to four enquiries per property, compared with 10 to 15 earlier on in the year.

"That said, a good address at the right price will sell, whereas if it is an overpriced, slightly compromised property, then forget it. Buyers are waiting to see what happens with mortgages and if interest rates are held again next month, it will be viewed as a little pigeon step in the right direction."

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