Yahoo Finance UK house prices jump to record £371,158 despite mini-budget turmoil
The average price tag on a UK house hit a new record high of £371,158 in October despite the mortgage rate rises that followed the mini-budget.
The average asking price on a home in the UK increased by £3,398 month-on-month, according to Rightmove, which said shortages of property for sale are continuing to underpin prices.
The property website said that surging interest rates are causing some prospective homebuyers to delay their decision.
Demand for buying new homes has fallen by 15% in the last two weeks, in the wake of the mini-budget that rocked the UK economy.
About 1,000 mortgage deals were removed from sale by lenders last month, after former chancellor Kwasi Kwarteng’s mini-budget on 23 September spooked financial markets and prompted expectations of far higher interest rates.
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While buyer demand was still 20% higher than in the same period in 2019, it had fallen 15% compared to the same two weeks in 2021.
Tim Bannister Rightmove’s director of property science said: “Some aspiring first-time buyers will have had their plans dashed by the sudden nature of the mortgage rate rises, and now face a difficult situation with rents also rising, and a shortage of available homes to rent.
“Buyer demand was already starting to soften and higher interest rates were anticipated but they’ve been brought forward sharply due to market uncertainties.”
He added: “It’s understandable that some new movers who have the option to wait may want a clearer view than they’re getting right now before they proceed with a major purchase such as a home.
“With uncertainty over where mortgage interest rates will go, those who can still afford to proceed may decide that waiting too long could come at an even higher cost than taking action to move now, especially if the level of demand continues to outstrip supply and supports prices.”
Rightmove reported a rush of buyers trying to complete sales before mortgage offers fixed at prior lower repayment rates expired. Prices were reduced on 23% of homes on sale, compared with 21% last month.
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The property website said asking prices were likely to drop in November and December, in line with normal seasonal price changes, and that there were “more economic events to play out” before forecasting the market in 2023.
Matt Powell, a branch manager at Royston and Lund estate agents in Nottingham said: “The long-term repercussions of the mini-budget announcement are probably still too early to see in real time, although they had a dramatic and almost immediate impact on mortgage interest rates.
“Those with transactions under way are keen to see them through and complete their deal quickly with the rates already secured.
“Some buyers are actively having to re-evaluate their borrowing options quickly and while we haven’t seen the appetite to buy dwindle too much, some buyers’ ability to proceed has been thrown into question.
“That being said, demand is still outstripping supply for the time-being, so as long as properties are priced correctly, activity levels are still strong.”
