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House Prices Rise in October Posted: 29th October 2022
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Ever since the mini budget in September, we have seen the financial markets in turmoil with rising inflation and interest rates affecting the mortgage market. Products were withdrawn, and the average five-year fixed rate reached over 6%.

However, against this backdrop of rising energy, fuel and food costs, the average asking price of a home in the UK has increased again. It has now hit a new record, standing at £371,158. However, this is a slight increase in the figures in September and slightly lower than the five-year average we usually see in October.

So why have prices risen? This is because there is still an imbalance between supply and demand which traditionally has underpinned property prices. This month there continue to be more people wanting to buy new homes than there are homes for sale. This means that every home for sale has more people interested in putting in an offer and with prices mostly listed as ‘offers over’, this means that there is still a bidding war against many homes for sale, and sellers haven’t felt the need to reduce the price to secure a sale.

House prices are big news, especially after the uncertainty over the last few months following the mini budget and a change in the premiership. Many commentators thought prices would fall, but we are only seeing a softening of price rises.

That said, the rapid rise in average mortgage interest rates has caused some would-be movers to put their plans on hold as their buying power is lower than it was this time last year, given the rising cost of living. In the weeks that followed the mini-budget, demand for new homes dropped by 15% compared to the same two weeks in 2021. However, it is still higher than it was in the same period in 2019.

There is still uncertainty over how far mortgage interest rates will rise, and the financial statement has been delayed from this week to November 17th. People who can still afford to proceed with their plans might decide that waiting too long could come at an even higher cost than taking action to move now, especially if the level of demand continues to outstrip the number of homes available to buy, and rates could rise even further.

We are likely to see a drop in house prices in November and December as these are traditionally quieter months so it’s hard to know what will happen as we progress into 2023.

 


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