After consistently seeing a fast pace of growth through 2022, UK house price growth slowed for the first time in September.
The Nationwide House Price Index showed house prices grew 9.5% in the year to September, down from 10% in August.
Although the pace house price growth slowed, house prices were still flat month on month highlighting there was yet to be any major disruption to the housing market.
The Nationwide Chief economist highlighted a lack of supply as supporting house prices even though new buyer enquiries dipped.
“There have been further signs of a slowdown in the market over the past month, with the number of mortgages approved for house purchase remaining below pre-pandemic levels and surveyors reporting a decline in new buyer enquiries. Nevertheless, the slowdown to date has been modest and, combined with a shortage of stock on the market, this has meant that price growth has remained firm,” said Robert Gardner, Nationwide’s Chief Economist.
The recent volatility in fixed income markets and indications of higher mortgage rates will lump further pressure on house prices and some experts are predicting house prices could fall by 10%-20% in the next year.
The removal of mortgage products by banks and building societies will also send waves through the housing market as buyer find themselves limited in options to secure new loans.
“There were already gathering clouds in the property market, with surveyors saying fewer people were househunting and buyers were losing confidence. In fact consumer confidence hit record lows. There was no real rush to buy, and mortgage approvals for purchases stuck below pre-pandemic levels,” said Sarah Coles, senior personal finance analyst, Hargreaves Lansdown.
“However, the storm broke this week, with around 40% of mortgages being pulled from shelves, because the pace and scale of the collapse in the bond market meant it was impossible to sensibly price them. When the dust settles, and lenders come back to the market, we can expect eye-watering rises in interest rates.”
“This needs to be seen in the context of how dramatic house price rises have been in recent years, and the fact that our bills have raced away too. Even if people are still keen to buy, they may no longer qualify for a mortgage on affordability terms.”