House price growth appears to be rising after a slow summer, while rental growth may be on the way down.
However, a slowdown in construction could mean problems ahead for the housing market.
- Mortgage lenders cut rates to the lowest level in almost two years last month after the Bank of England’s base rate cut. However, the Bank seems likely to hold the base rate at 5% at this month’s Monetary Policy Committee meeting, reducing the chances of further cuts for borrowers.
- Halifax reports that house prices rose 4.3% in the year to August, but says this is partly due to the weak growth seen a year ago as well as increasing buyer optimism. They estimate the average UK house price at £292,505.
- Nationwide reports lower annual growth than Halifax, at 2.4%, and says that house prices actually fell 0.2% month to month. Nevertheless, that growth figure is the highest they’ve reported since December 2022. Nationwide’s average house price is also lower than Halifax’s at £265,375.
- While house prices are rising, Zoopla’s latest Rental Market Report finds that rental growth is slowing down. Rents for new lets rose 5.4% year on year in July 2024, only around half of the figure for July 2023. The average rent stood at £1,245 per month.
- Why is that? Zoopla says rental supply has risen by about a fifth since the same time last year. Demand from tenants is also down – though by no means low yet. With 21 people reportedly competing for each property, there is still some way to go before supply and demand are balanced.
- But the Office for National Statistics (ONS) puts rental growth for July significantly higher than Zoopla, at 8.6% year on year. The ONS also deviates from Natiowide and Halifax in house prices, reporting that price grew by 2.7% in the year to July to reach £288,000.
- Housebuilding is a long way adrift of the government’s 300,000 a year target. Just 31,670 new homes were completed in the first quarter of this year, according to the ONS – less than half of what is needed. Barratt Developments, the UK’s largest housebuilder, said that high interest rates and inflation are putting off buyers – and forecast that it would reduce construction further next year.
