UK house price growth stalls as rate rises pinch incomes
UK house prices were flat this month for the first time since July 2021, Nationwide figures show, revealing the impact of rising interest rates and high inflation.
The average house price was unchanged between August and September, ending more than a year of uninterrupted growth. The annual pace of growth slowed to 9.5 per cent from 10 per cent in the previous month.
Further signs of a slowdown in the market have emerged over the past month, said Robert Gardner, Nationwide’s chief economist, as the number of mortgages approved for house purchase remained below pre-pandemic levels and surveyors reported a decline in new buyer inquiries.
Higher interest rates and rising house prices have also pushed the typical mortgage payment as a share of take-home pay well above the long-run average.
“The outlook is even gloomier, due to a further jump in mortgage rates,” said Gabriella Dickens, UK economist at Pantheon Macroeconomics.
She calculated that the rate for a two-year fixed-rate mortgage with a 75 per cent loan to value ratio rose to 3.64 per cent in August, from 1.64 per cent at the turn of the year. After markets went into a tailspin this week in reaction to the UK chancellor’s tax-cutting “mini” Budget, that rate is on course to rise to about 6 per cent soon.
This story originally appeared on: Financial Times - Author:Valentina Romei
