UK house prices post weakest increase since 2012
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UK HOUSE price growth slowed sharply to its weakest pace in more than a decade after the summer surge in mortgage rates, official data show.
Average prices edged up 0.6 per cent in the 12 months to July to £290,000 (S$488,663), a marked slowdown from 1.9 per cent growth the previous month, according to the Office for National Statistics.
The fall came after mortgage rates surged to a 15-year high in July as traders ramped up their bets on the Bank of England boosting interest rates to stamp out inflation.
The figures suggest that higher interest rates are stretching affordability and taking the heat out of the market, but are still not causing a crash in prices.
Lenders and economists believe that prices are roughly halfway through their slump, with more forward-looking surveys pointing to further weakness ahead despite a recent easing in home-loan rates.
The average house price has fallen £2,363, or 0.8 per cent, from the peak in November after surging during the pandemic. Annual price growth has turned negative in South West England, Wales and London, where they have fallen 0.8 per cent.
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“The renewed jump in mortgage rates started to depress prices in July,” said Gabriella Dickens, senior UK economist at Pantheon Macroeconomics.
“Consumers’ confidence is still very weak by past standards and expectations of further house price falls remain entrenched. On balance, then, we expect a peak-to-trough fall of around 6 per cent, with the nadir coming at the end of the year.”
Separate data from the ONS showed that tenants are also feeling the squeeze as landlords pass on higher borrowing costs and demand for rented accommodation grows.
Private rental prices climbed by 5.5 per cent in August compared with a year earlier, up from growth of 5.3 per cent in July. It was the largest increase since records began in 2016.
Rents in London, where tenants are facing a severe mismatch between supply and demand, jumped 5.9 per cent, the fastest since 2006 when the data started. BLOOMBERG
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