UK house prices rise led by surge in London, Halifax says

Published Wed, Sep 7, 2022 · 02:58 PM

UK HOUSE prices rebounded in August, led by the strongest growth in London in 6 years, one of the nation’s biggest mortgage lenders said.

Halifax said its measure of property prices rose 0.4 per cent last month after a 0.1 per cent dip the month before, bringing the average cost of a home to a new record of £294,260 (S$476,129).

The increase defied predictions that a cost-of-living crisis and rising mortgage costs would puncture the strength of the property market, which kept growing through the pandemic and last recession.

“While house prices have so far proved to be resilient in the face of growing economic uncertainty, industry surveys point towards cooling expectations across the majority of UK regions, as buyer demand eases, and other forward-looking indicators also imply a likely slowdown in market activity,” Kim Kinnaird, director of Halifax Mortgages, said in a statement Wednesday (Sep 7). 

Kinnaird expects a “more challenging period” for house prices in the coming months because gains have stretched affordability for many purchasers.

Mortgage rates are now at their highest since 2016 after 6 interest-rate increases from the Bank of England since December, with another half-point rise expected next week. 

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The annual rate of house price growth was 11.5 per cent, little changed from the previous month’s 11.8 per cent. London and Wales were the strongest regions for sales, with prices in the capital jumping 8.8 per cent from a year ago, the most in 6 years. Wales saw the fastest growth since 2005, up 16.1 per cent.

The figures confirm a reading from the UK’s other main mortgage lender, which also registered growth in the market in August, typically a month where prices soften.

Nationwide Building Society said the average cost of a home rose 0.8 per cent in August to £273,751, the 13th consecutive monthly increase. 

“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,” said Nationwide chief economist Robert Gardner. BLOOMBERG

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