House prices up £50k on 2020 prices as market cools, says Nationwide | Personal Finance | Finance


Britain’s largest building society revealed a cooling off in August amid early signs of the market losing momentum due to soaring inflation and energy costs.

Annual growth slowed to 10 per cent in August, down from 11 per cent in July, according to the lender’s latest house price index.

However, prices were up 0.8 per cent month-on-month. The average three-bed semi is now valued at £273,751 – £50,000 more than two years ago and up £2,000 in a month.

Demand for homes is still outstripping supply and that is bolstering asking prices, according to Iain McKenzie, chief executive of The Guild of Property Professionals.

He said: “This is the 13th monthly rise in a row, with prices kept sky-high by limited housing supply on the market. The signs of a slowdown are growing, however, with activity levels falling at the same time as new mortgage approvals drop.

“Expected interest rate rises combined with soaring household costs will start to bite in the coming months.

“First-time buyers though, many still priced out of the market and hoping to get on the ladder, will have their fingers crossed that prices soften to allow them to take that first step.”

The Nationwide also warned that an increase in energy costs coupled with mortgage interest rates rising is going to put household budgets under pressure in the coming months.

It found that the least energy efficient property could typically see bills surge by £2,700 a year, or £225 a month.

This comes as analysts predict the Bank of England will further hike up interest rates from the current 1.75 per cent base rate. This is set to push up mortgage repayments for homeowners not tied to a fixed rate.

Last week, property portal Zoopla said first-time buyers would need to earn an extra £12,250 on average to afford a home as mortgage rates climb this year.

Robert Gardner, Nationwide’s chief economist, said: “There are signs that the housing market is losing some momentum, with surveyors reporting fewer new buyer inquiries in recent months and the number of mortgage approvals for house purchases falling below pre-pandemic levels.

“We expect the market to slow further as pressure on household budgets intensifies in the coming quarters, with inflation set to remain in double digits into next year.

“Moreover, the Bank of England is widely expected to continue raising interest rates, which will also exert a cooling impact on the market if this feeds through to mortgage rates, which have already increased noticeably in recent months.”

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