Annual house price growth slows

Αnnual house price growth softened in August but remained in double digits for the tenth successive month. Meanwhile, prices rose by 0.8% on a monthly basis after taking account of seasonal effects – the thirteenth consecutive monthly increase for this measure.

Modest slowdown

In the past two years, the average house price has increased by almost £50,000. Indeed, the fact that 10% growth is considered a softening says a lot about the current market.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said, “There are signs that the housing market is losing some momentum, with surveyors reporting fewer new buyer enquiries in recent months […] However, the slowdown to date has been modest, and combined with a shortage of stock on the market, has meant that price growth has remained firm.”

Energy price cap rise

In September, the new Prime Minister Liz Truss announced that the government would cap household energy bills at £2,500 for two years.

The Energy Price Guarantee, expected to cost up to £150bn, will limit the price that suppliers can charge for each unit of energy. Specifically, the average unit price for dual fuel customers paying by direct debit will be limited to 34.0p per kilowatt hour (kWh) for electricity and 10.3p per kWh for gas.

EPC you later

Before the support scheme was announced, when the energy price cap had been set to rise by 80%, average bills were expected to increase more for properties with worse energy efficiency ratings, according to Nationwide. Houses with an energy performance certificate (EPC) rating between A and C would have paid £1,700 more each year, compared to £3,900 for F-to-G-rated properties.

Now, as well as seeing their bills capped, less efficient homes will benefit from the scrapping of green levies, which currently add £150 to bills each year.

Outlook for 2023

House prices are predicted to flatline next year¹, analysts predict, as rising interest rates and inflation put pressure on households. By the end of 2024, the same research expects house price growth to rise modestly to 2%.

Aneisha Beveridge Head of Research at Hamptons, pointed to “a cocktail of risks on the horizon,” which make stalling growth likely next year. She commented, “Financial pressures are raining down on households as inflation bites and mortgage rates rise. And it’s unlikely we’ve seen the worst of it yet, with rates expected to peak at the beginning of 2023.”

The analysis also foresees transactions falling by 12% in 2023 before rebounding in 2024 as a result of households who delayed a move in 2023 taking advantage of declining interest rates.

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As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

¹Hamptons, 2022