UK house prices flatline as rising mortgage costs weigh on market
Average cost of home in September was £298,441, says Lloyds – about the same as year earlier and in August Business live – latest updates UK house prices flatlined in September, according to a leading index, as rising mortgage costs started to weigh on the market. The average cost of a home was £298,441, roughly the same as it was a year earlier and in the previous month, according to the tracker…
In September, the average cost of a home in the UK remained steady at £298,441, according to Lloyds. This figure is nearly identical to the previous year and the prior month, as reported by the tracker previously known as the Halifax House Price Index (HPI). Economists surveyed by Reuters had anticipated a 0.1% monthly increase in prices, along with a 0.2% annual rise.
The decline in September followed a 0.3% drop in August, marking the first decrease in house prices in three years. The decline was attributed to geopolitical uncertainty, higher mortgage rates, and decreased affordability for prospective buyers.
Lloyds' mortgages director, Andrew Asaam, noted that despite the overall market being relatively calm, property prices have managed to remain steady amid rising mortgage rates, which have been influenced by shifting expectations about the future trajectory of the base rate. In recent weeks, major banks and building societies have seen price increases due to turbulence in global bond markets, even though the Bank of England's base rate has not changed since December last year.
A five-year fixed-rate mortgage average reached 6% for the first time in three years on Monday, potentially impacting borrowers nearing the end of their fixed-rate deals and prospective buyers seeking the most competitive mortgage rates. Rising mortgage rates exacerbate the challenges for consumers already grappling with higher energy bills resulting from the ongoing conflict in Iran, while rising prices in other sectors fuel worries of a renewed cost of living crisis.
Asaam stated that although some people might be adopting a more cautious approach due to higher mortgage rates and economic uncertainty, the number of new inquiries from prospective buyers has surged to its highest level since February. He added that any future movement in house prices is expected to be modest.
Tom Bill, head of UK residential research at Knight Frank, observed that 2023 has been characterized by rising energy prices and stagnant house prices, exacerbated by the unpredictable Middle East conflict and higher borrowing costs. The UK government's recent budget has further heightened uncertainty among buyers and sellers, as conflicting rumors regarding recurring taxes circulate.
Mortgage applications for home purchases declined by 18.2% between July and September compared to the previous year, while applications from first-time buyers fell by 18.6% over the same period. Nevertheless, an increase in remortgaging applications helped to mitigate the overall decline in mortgage activity.
Written by urgent.news from Guardian Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
