UK house price growth eases but still hits double digits

·2-min read
 A man walks past terraced houses in London.
According to the Right move�s latest house price index, as many as 100,000 will miss the stamp duty holiday, which ends on 31 March 2021. (Photo by Dinendra Haria / SOPA Images/Sipa USA)
Wales and Northern Ireland saw the strongest house price growth. (Photo: Dinendra Haria / SOPA Images/Sipa USA)

Annual house price growth remained in double digits for the fifth month running in September, but saw a slight slowdown from the month before to 10% from 11% in August. 

According to Nationwide's House Price Index (HPI), prices rose by 0.1% month-on-month, even after taking account of seasonal effects. As a result, house prices remain about 13% higher than before the pandemic began in early 2020.

"Most mortgage offers in September likely relate to transactions that will complete after the Stamp Duty Land Tax (SDLT) threshold is reduced to its pre-Covid £125k level at the start of October, from £250K at present. Other indicators of demand right at the start of the buying process have weakened since the summer too," said Gabriella Dickens, senior economist at Pantheon Macroeconomics. 

London and most English regions lagged the rest of the UK in terms of growth, coming in as the worst-performing region in Q3. Wales and Northern Ireland saw the strongest house price growth. 

In Wales, house prices were up 15.3% year-on-year – the highest rate of growth since 2004. Price rises remained elevated in Northern Ireland at 14.3%. House price growth in Scotland picked up to 11.6% in Q3, in contrast to the previous quarter when it was the weakest performing part of the UK (at 7.1%).

England saw a slowing in annual house price growth to 8.5%, from 9.9% in Q2. Price growth in northern England (North, North West, Yorkshire & Humberside, East Midlands and West Midlands) continued to exceed that in southern England (London, Outer Metropolitan, Outer South East, East Anglia and South West).

House prices have continued to rise more quickly than earnings in recent quarters, which means affordability is becoming more stretched. 

Read more: UK mortgage approvals fall as stamp duty holiday frenzy ends

Nationwide calculated that raising a deposit remains the main barrier for most prospective first-time buyers. A 20% deposit on a typical first-time buyer home is now around 113% of gross income – a record high.

"Recent price patterns suggest an element of rebalancing is occurring where most of the regions that have seen the strongest price growth are those in which affordability is still close to or below the long run average," said Robert Gardner, Nationwide's chief economist.

The data comes following news that mortgage approvals have fallen in the UK, coinciding with the end of the stamp duty holiday. 

The Bank of England said net borrowing in August was £1.4bn below the 12-month average to June 2021, when the full stamp duty holiday was in effect.

Gross lending bounced back to £21.5bn in August, from £16.6bn in July. Gross repayments fell slightly to £17.6bn.

Watch: How much money do I need to buy a house?

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