Annual house price growth of 10% or more has been recorded for each of the past five months, according to the latest data from the Nationwide.
In August, Advantage wrote that while demand from potential buyers remained high, there was a shortage of available housing stock, which has been helping to drive up prices, and both factors remained relevant in September.
House prices rose by 10% in September
The BBC reported that prices in September were up 10% compared with a year earlier, a slight slowdown from 11% in August.
The double-digit rise was driven by recent activity in Wales and Northern Ireland, the Nationwide said, with London still seeing the slowest growth.
Rapidly rising house prices continues to create financial problems for potential first-time buyers, despite record low mortgage rates being offered by lenders.
Some are finding themselves priced out of tourist hotspots
A recent report by the Office for National Statistics (ONS) said that people in tourist hotspots – which have become increasingly popular for relocating buyers – were at risk of being priced out of buying a home in the areas where they worked.
Nationwide bases its house price estimates on its mortgage data, and Robert Gardner, the building society’s chief economist, said that property values had continued to rise more quickly than earnings, which meant affordability was becoming more stretched.
“Raising a deposit remains the main barrier for most prospective first-time buyers. A 20% deposit on a typical first-time buyer home is now around 113% of gross income – a record high,” he said.
First time buyers have been ‘caught by surprise’
Karthik Srivats, co-founder of mortgage lender Ahauz, said: “First-time buyers have been caught totally by surprise over the past year as the market has taken off.
“They have seen their budgets hammered in real terms and, while they have been helped by low rates and government support over the past year, gains in property values across the country have more than outweighed that leg up.”
The Guardian noted that the average house price on Nationwide’s measure is about 13% higher than before the pandemic began in early 2020.
The stamp duty threshold in England and Northern Ireland will return to normal levels from Friday, after a holiday was temporarily put in place last year, before being gradually reduced from July this year.
Advantage’s view: There has been some speculation that house prices could collapse following the end of the Stamp Duty holiday. However, it seems more likely that, as we’ve seen in September, we’ll continue to see a very gradual slowing of house price growth, with affordability remaining a challenge for many potential first time buyers.
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