18 October 2023
If you are covering the UK house price index and the private rental statistics, please see the following comment from Charlotte Nixon, mortgage expert at Quilter:
"The headline figure of a 0.2% increase in house prices over the last 12 months should be taken with a pinch of salt, as it fails to tell the whole story. With just this morning, the CPI inflation figure coming in at 6.7%, we can see that house prices are nowhere near keeping up with the level of inflation elsewhere in the economy.
"Added to this, house price data tends to massively lag the real world events happening today. The market is very subdued at the moment and this lack of demand is causing sellers to drop prices in a bid to attract those who might be adopting a wait and see approach.
"There are some positive movements though. Rightmove data also released today, shows that the average 5-year fixed mortgage rate is now 5.42%, down from 6.08% a year ago and the average 2-year fixed mortgage rate is now 5.88%, down from 6.32% a year ago. Falling rates will help people feel more secure in their search for a home without the threat of a rug being pulled out from under them by rates skyrocketing.
"However, it is likely that we are going to see prices stall and fall throughout the country in the coming months. Interest rates are probably going to stay higher for longer than originally anticipated but those who can afford to move despite elevated rates will eventually decide to take action especially if they are renting and their re-entry into the market will hopefully provide some buoyancy in the spring of 2024.
"The increasingly tight rental market will ultimately push more people into trying to buy as people find that mortgage rates could end up being cheaper than rent. Additional data published today found that private rental prices paid by tenants in the UK rose by 5.7% in the 12 months to September 2023, up from a revised 5.6% in the 12 months to August 2023. Some more lucky first time buyers will be looking to the Bank of Mum and Dad for a deposit to help them potentially achieve lower monthly payments in a home of their own compared to the sky high rental market, which continues to hot up as landlords sell up due to its unprofitability."
