UK House Prices Flatline in September, Lloyds Index Shows
UK house prices were broadly unchanged in September, with the average home costing £298,441, according to the Lloyds tracker formerly known as the Halifax HPI, Theguardian reported. That figure was about the same as
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UK house prices were broadly unchanged in September, with the average home costing £298,441, according to the Lloyds tracker formerly known as the Halifax HPI, Theguardian reported. That figure was about the same as a year earlier and as in August, undershooting forecasts.
Economists polled by Reuters had expected a 0.1% monthly rise, on the median forecast, along with a 0.2% annual gain, Theguardian said. The flat reading followed a 0.3% fall in August, the first decline in three years, when buyers were squeezed by geopolitical uncertainty, higher mortgage rates and stretched affordability.
Key facts
- The average UK home cost £298,441 in September, roughly unchanged from August and from a year earlier, according to the Lloyds index.
- Economists surveyed by Reuters had forecast a 0.1% monthly rise and a 0.2% annual increase.
- Prices fell 0.3% in August, the first decline in three years.
- The average five-year fixed-rate mortgage reached 6% on Monday, the first time in three years.
- Stonebridge found home-purchase mortgage applications fell 18.2% year on year in the third quarter, with first-time buyer applications down 18.6%.
Borrowing costs drive the stall
Most big banks and building societies raised mortgage prices in recent weeks because of turmoil in global bond markets, even though the Bank of England base rate has not changed since December last year. Those increases matter most to borrowers whose fixed-rate deals are ending, to prospective buyers hoping to take out a mortgage, and to sellers chasing the best price from them.
Andrew Asaam, the mortgages director at Lloyds, said the market overall had been fairly subdued but that property prices had so far proved resilient through a period of higher mortgage rates, which he attributed to shifting expectations about the future path of the base rate. He said new inquiries from prospective buyers were now at their highest since February, adding that any movement in house prices was likely to remain modest.
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Tom Bill, head of UK residential research at the estate agent Knight Frank, described the year as a story of rising energy prices and stalling house prices, as the unpredictable Middle East conflict drives borrowing costs higher. He said this month’s budget adds to the uncertainty as buyers and sellers wait to see which of the recurring tax rumours proves true.
The pressures extend beyond mortgage pricing. Higher energy bills, linked to the Iran war, are squeezing household budgets, while rising prices elsewhere are raising concerns about a new cost of living crisis.
Applications fall, remortgaging holds up
Quarterly figures from Stonebridge, one of the UK’s largest independent mortgage and protection networks, show the number of people applying for a mortgage to buy a property fell between July and September as higher borrowing costs weighed on prospective buyers’ budgets. Purchase applications dropped 18.2% compared with a year earlier, and first-time buyer applications slumped 18.6% over the same period. A rising number of remortgage applications helped slow the decline in overall mortgage activity.
Why it matters
A flat national average hides the fact that affordability is being tested from several directions at once: dearer debt, costlier energy and tax speculation ahead of the budget. Sellers who expected the steady gains of recent years now face a market where buyers have less room to bid, while anyone rolling off a cheap fixed deal confronts a materially higher rate. The August decline and September’s stall mark a clear break from the run of increases earlier in the year.
What to watch
The next signals are the budget and its tax decisions, fresh inflation and energy price data tied to the Iran war, and whether the 6% five-year fixed rate holds or eases as bond markets settle. Lloyds’ next monthly index will show whether September’s flat reading becomes a trend.
This article is not financial advice. Property and mortgage markets are uncertain and prices can fall as well as rise.
Source: The Guardian
Benjamin Carter covers business, finance, and the stock market for StockPil, focusing on the trends and data that matter to everyday investors.
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