House prices up, but house price inflation is slowing

Published 30th of September, 2021

The Nationwide published their house price index for September 2021 today

What they said

UK average house prices £248,742
A rise of £22.613 or 10% in the year
A fall of £115 during the last month

Twindig take

Looking back, house price inflation has been surprisingly robust, but looking forward the picture might not be so rosy...  

The data in the room

September marks the fifth month in a row that annual house price inflation has been in double digits. Annual house price inflation has therefore been very strong from April to September.

The South-North Divide

We have become used to seeing, reading and hearing about a North-South divide that favours the South, but in house price terms the situation has been turned on its head. House price inflation has been higher in the North than in the South and lowest of all in London, according to house price data released by the Nationwide this week.

Picture of regional house price inflation across the UK twindig Housing Hailey

A mixed third quarter

In the three months to 30 September, 2021 house price inflation accelerated in Wales, Northern Ireland and Scotland, but started to slow in most regions of England

The wrong sort of levelling up

Whilst for many rising house prices is seen as a good thing, for those looking to get onto the housing ladder it is the exact opposite.

House prices have been rising more quickly than wages, which means that homes are increasingly less affordable. Raising a deposit remains the biggest barrier to homeownership for most first time buyers and the Nationwide believes that a 20% deposit on a typical first-time buyer home is now around 113% of gross income, a record high.

The Nationwide looked at mortgage payments relative to take-home pay and found that in 10 of the 13 regions across the UK the ratio is above its long-run average, whereas before the pandemic only London was above its long-run average.

Graph chart to show UK regional house price affordability twindig Housing Hailey

Are house prices about to fall?

Year on year house price inflation remains strong, however, in September, house price inflation stalled. Is this a pause for breath or a turning point? The double whammy of the end of the Stamp Duty holiday and the furlough scheme would, in our view, put downward pressure on house prices.

However, the strength of the housing market during the pandemic has so far baffled commentators and experts alike. Stock shortages will continue to underpin prices and in the coming months, we will see if the stamp duty holiday was a catalyst or a crutch.

A period of falling house prices would help those who missed the stamp duty holiday boat but cause a case of buyer's remorse for those who didn't.

Housing Hailey

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