House prices rose 13.6% in August as experts predict average price could reach £300,000

By Liam On Oct 19, 2022

House prices rose 13.6 per cent in August, according to official figures, as experts predict the average price could reach £300,000 despite economic uncertainty.

In the UK, the average house price is now £295,903, up 0.9 per cent from July, according to the Office for National Statistics.

House price inflation slowed from July, when the figure was 16 percent higher than a year earlier.

The number of homes for sale has also risen by 50 percent since April, reports real estate association Propertymark.

Slower growth: House prices rose 13.6% in August, down from July when they were up 16% year-on-year according to the ONS

Iain McKenzie, chief executive of The Guild of Property Professionals, said: “You’d be forgiven for assuming that the political and economic turbulence we’ve seen in recent months would have a bigger and more direct impact on house prices.

“The reality is that house prices depend on a variety of factors, including housing supply and demand, and the effects are often slow.

“These figures show that there is a slight cooling in year-on-year growth, but far from a snow storm.”

He added that the real estate market was reassured that the stamp duty changes announced in the mini-budget were among the few policies that have not seen a reversal in recent days.

Jeremy Leaf, North London broker and former RICS residence president, added: “The somewhat historic nature of these expanded numbers demonstrates the strength in the housing market before it hit the buffers at the end of September.

“Since then, activity has weakened and prices have fallen slightly, but there is still plenty of restrained demand, not least to take advantage of favorable existing mortgage rates before rising further.”

However, since the former Chancellor’s mini-budget last month, mortgage rates have risen rapidly.

Earlier this week, the average fixed rate for a two-year mortgage across all loan-to-values rose to 6.53 percent, the day after new Chancellor Jeremy Hunt recalled much of the government’s package of tax cuts. .

The average rate for five-year fixed deals also rose to 6.36 percent, despite falling slightly below 6.30 percent late last week, according to financial information service Moneyfacts.

The last time the average two-year fixed-rate mortgage hit 6.4 percent or more was in August 2008 during the fallout from the global financial crash when it hit 6.94 percent.

Those in need of a new mortgage can access current rates based on their own circumstances using This is Money’s mortgage calculator.

Interest rate rise: The price of fixed income deals has continued to rise since late last year, but has accelerated since the government mini-budget

More homes coming on the market

Propertymark figures show that since April the number of homes for sale per real estate agency has increased from 20 to 30. This is the highest level since March 2021 when it was 31 per affiliated branch.

It was reported today that inflation was 10.1 percent in September, but despite rising interest rates and rising costs of living, Propertymark said there was still demand to move.

The number of buyers registered at each branch also increased.

However, agents reported that since April, more than half of sales (52 percent) have fallen below asking price, suggesting some of the heat is coming from the market.

Since April, the number of homes for sale per Propertymark affiliated real estate agency has increased from 20 to 30 — a 50% increase

The increase in the housing stock on the market has led to a return to balance between supply and demand after a period of high demand that contributed to the continued rise in house prices despite the tumultuous conditions.

However, 48 percent of homes are still being completed at or above asking price, meaning there is still some way to go to reach pre-pandemic levels. Between 2015 and 2020, 78 percent of sales were below the asking price.

Nathan Emerson, CEO of Propertymark, said: “In August and September we have seen an increase in people looking to have their homes appraised and sold. This is great news for buyers who missed out before.

“As the economic climate changes, sellers will have to be realistic about the prices they can achieve, but since most people move every 15 years, they still see a significant increase in value from what they would have paid.”

What to do if you need a mortgage?

Borrowers who need to find a mortgage because their current fixed-rate deal is expiring, or because they have agreed to a home purchase, have been urged to act, but not to panic.

Banks and mortgage banks are still lending and mortgages are still being offered and applications are being accepted.

However, rates change quickly and there is no guarantee that deals will last and not be replaced by higher rate mortgages.

This is Money’s best mortgage interest calculator powered by L&C that can show you deals that match your mortgage and property value

What if I have to transfer?

Borrowers should compare rates and speak to a mortgage broker and be willing to trade to get a rate.

Anyone with a fixed-rate deal that expires in the next six to nine months should research how much it would cost to re-mortgage now — and consider taking on a new deal.

With most mortgage agreements, costs can be added to the loan and they are not charged until it is closed. By doing this, borrowers can secure a rate without paying expensive arrangement fees.

What if I buy a house?

Those with a home purchase should also aim to get rates as soon as possible so that they know exactly what their monthly payments will be.

Home buyers should be careful not to overextend themselves and be prepared for the possibility that house prices could fall from their current high levels as higher mortgage rates limit people’s borrowing capacity.

Compare mortgage costs?

The best way to compare mortgage costs and find the right deal for you is to talk to a good real estate agent.

You can use our best mortgage interest calculator to display deals that fit your home value, mortgage size, term and fixed interest needs.

However, keep in mind that rates can change quickly, so the advice is that if you need a mortgage to compare rates and then talk to a broker as soon as possible, they can help you find the right mortgage for you. .

> Check out the best fixed rate mortgages you can apply for

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