- £248,742. Annual home value growth slows to 10% with average price tag on
- Month-on-month, property prices rose just 0.1%, said Nationwide
- Wales and Northern Ireland have seen the strongest increase in home prices
- The average 20% deposit for a first time buyer is now 113% of their normal salary
Research has shown that first-time buyers now need to save 113 percent of their entire annual salary for a typical home deposit.
Although property inflation slowed in September, home prices are rising at a double-digit pace, the Nationwide Building Society said today.
This means £22,613 has been added to the average home price in just one year, with the average home price increasing 10 percent to £248,742.
Robert Gardner, chief economist at Nationwide, said: ‘Making deposits remains the main obstacle for most potential first-time buyers. The 20 per cent deposit on a first-time buyer’s home is now about 113 per cent of gross income – a record high.’
House prices in London and the surrounding area are rising at the slowest pace in the UK
Nationwide home price annual change, mapped by Nationwide, with light blue colors showing where prices are rising fastest
House price inflation eased slightly from 11 per cent year-on-year in August.
During the pandemic, the housing market has been turbocharged by a desire for fresh surroundings in conjunction with stamp duty holidays, cheap mortgage deals and well-known buyer demand for more space.
In July the stamp duty of up to £500,000 was reduced to £250,000 and from yesterday, 1 October, property purchase tax rates returned to normal – for all households billing more than £125,000. For first time buyers there is a limit of over £300,000. Similar tax breaks have already expired in Scotland and Wales.
Some agents are suggesting that the seller’s market mood is changing in a big way at first.
James Pendleton, Lucy Pendleton, a property expert at Independent Property Agents, said ‘the air was sucked in September for sellers who thought the market called the shots’.
Annual housing price growth slows but remains in double digits
Pandemic property boom has seen the cost of the average home shoot
Wales and Northern Ireland saw the fastest home price inflation in the UK over the summer, while London was the weakest.
In Wales, property prices have risen more than 15 percent in the past year. Meanwhile, London saw Annual growth slowed to 4.2 percent between June and September, down from 7.3 percent in the spring.
England saw home price inflation return to 8.5 percent between March and June from 9.9 percent.
Property price increases in the north continue in southern England, Nationwide said.
Nationwide’s chief economist Robert Gardner said: ‘Annual housing price growth was in double digits for the fifth straight month in September, although there was a slight slowdown to 10 percent from 11 percent in August.
Taking into account seasonal effects, house prices rose by 0.1 per cent month-on-month. As a result, home prices are (approximately) 13 per cent higher in early 2020 than before the pandemic began.
Demand for housing has been strong since the first coronavirus lockdown measures were lifted in the spring of 2020.
The surprising pandemic property boom has been aided by cheaper mortgage rates and fueled by demand for larger properties and a shift in attitudes towards more people working from home.
This has given rise to red-hot markets in rural areas and commuter towns bordering popular rural hotspots, and has been exacerbated by the stamp duty breaks introduced by Chancellor Rishi Sunak.
Nationwide said home prices in September were about 13 percent higher in early 2020 than before the pandemic began.
Northern Powerhouses: With one brief exception, home prices in the North have been running consistently higher than those in the South for many years.
First time buyers and movers suffer from high prices
Property prices continue to rise more rapidly than earnings, which means affordability is being increased more.
Affordable mortgage rates enable borrowers to pay higher prices going forward, but the main problem for many people is raising a deposit for a home first or saving up to add equity for a move.
Mr Gardner said: ‘Due to historically low levels of interest rates, the cost of servicing typical mortgages is still well below the levels recorded during the financial crisis. However, even on this measure, affordability is becoming more challenging.
For example, if we look at typical mortgage payments relative to take-home pay across the country, it is notable that in most areas of the UK (10 out of 13), this ratio is now above its long-term average. In contrast, pre-pandemic, this was the case in only one area (London).
‘Recent price patterns suggest that an element of rebalancing is occurring, with most areas seeing the strongest price increases, where affordability is still close to or below the longer-term average.’
Inexpensive mortgages are keeping the market afloat, but first-time buyers in many parts of the country are making monthly payments higher than the long-term average in relation to wages.
What next for home prices?
With the end of today’s holiday and a hike in interest rates on the cards, the future is tipped to come closer than ever, it is unclear how the property market will pan out over the next few months and into the next year.
Mr Mali said: ‘As we look towards the end of the year, the outlook remains uncertain.
“Given the incentive for people to carry forward their purchases to avoid additional tax, activity is likely to moderate for the period after the stamp duty holiday ends at the end of September.
‘Also, built-in …