House Prices Rise in October

The property market is headline news, with commentators keeping a close watch on what’s happening in the mortgage market following the min-budget debacle. Inflation is at an all-time high, the cost of living is higher than ever, and the Bank of England has made it clear that it will take any action necessary.

However, against this backdrop, the average asking price of a home in the UK rose again in October; according to Rightmove, it has reached a new record of £371,158.

Although it’s a slight increase, it’s an increase, nonetheless. Although it is slightly lower than the five-year October average, given the inflation rate, it’s surprising news.

So what has caused this rise in house prices when it was anticipated that prices would start to fall? The main reason is that more people are looking to purchase a home than are available. This imbalance of supply and demand has historically underpinned house prices in the UK. Over the last few months, sellers putting their home on the market have had enough interest not to reduce the asking price.

This year, we have seen slightly less demand from buyers than there has been in the last two years following the pandemic. After the lockdown lifted and the property market effectively reopened, the race for space and re-prioritisation meant that house prices rocketed beyond anyone’s expectation. We are now heading back to a more normal property market – but with demand continuing to outweigh supply, the prices continued to rise.

The rapid rise in average mortgage interest rates since December 2021 has meant that many home-movers have put their plans to move on hold. In the two weeks following the mini-budget, demand dropped by 15% compared to the same two weeks last year. However, it is still higher than it was in the same period in 2019.

Many movers have opted to wait until they have a clearer view of interest rates following the withdrawal of many products. Some people may view that with rates predicted to rise further, it could be beneficial to move now even though rates are higher than they have been in the last few years. House prices could still be supported by demand and supply, although we could still see a seasonal drop in average asking prices in November and December.