back to school – and further house price growth?

Just when it looked as though they couldn’t possibly edge any higher, given rising food, fuel and energy bills, along with interest rates, house prices continue to do just that. Figures out this week from the Land Registry reveal that the annual rate of UK house price growth soared to 15.5 per cent in July, nearly twice the rate of growth seen in the year to June. Parts of the country witnessed even more spectacular rates of growth, with the South West seeing prices rise by 20.7 per cent, while London lagged behind with 9.2 per cent.

After a couple of years of rising prices, it may be surprising that values continue to edge up to such an extent. Prices tend to rise where there is demand combined with lack of stock and these figures illustrate that, with the number of would-be buyers continuing to outstrip property for sale. However, the Land Registry pointed out that the annual rate of growth was pushed artificially high because prices dropped last July in response to the end of the stamp duty holiday.

There is also the time lag in the data to consider, as purchases completed in July would have been agreed in April, at a time when many were blissfully unaware as to what was to come in terms of the rising cost of living. Those considerable pressure points of rising interest rates and the cost of living haven’t yet been factored into transactional flow.

Subsequently, this price growth is unsustainable because of the impact of affordability and what buyers are willing to pay for a mortgage. This will inevitably have a dampening effect on values, which could be the tipping point for the housing market. With the Monetary Policy Committee likely to raise interest rates again next week for the seventh time since December, affordability concerns are only going to grow.

Other, more up-to-date, indices are beginning to suggest that a slowdown is already underway. Halifax’s August house price index shows a slowing rate of house price growth with clear signs of a market that is cooling. Buyers are still active and looking to purchase but are now more selective and calculated in their offers, taking into consideration higher mortgage rates, higher inflation and higher energy costs. Sales are happening but at a slower pace.

As the market continues to take shape as we move into autumn, we still feel a possible government intervention may be needed to restructure stamp duty, allowing and helping buyers to get on the ladder and reduce the pain of higher mortgage rates a little. All eyes will be on next week’s mini Budget which could be an opportunity to provide support where it is needed most.


how MT Finance can help

With the latest Bridging Trends survey revealing that transactions among contributors were up to £178.4m in Q2, compared to £156.8m in the first quarter, the appeal of short-term finance continues. Buyers, including owner-occupiers and investors, who need to move quickly in order to beat stiff competition for property and can’t wait for a standard mortgage application to be approved will find a bridging loan from MT Finance to be fast, flexible, and as stress-free as possible.

If you’d like to find out more, get in touch by calling us on 0203 051 2331, emailing or by filling in our online contact form.

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