The growth of house prices in London reached a six-year height in August. Prices in the country as a whole have followed suit.
Halifax, one of the UK’s largest mortgage banks, reported that real estate prices rose by 0.4% over the past month after a 0.1% dip in July. As a result, the average home price reached a record-setting amount of 294,260 pounds.
This growth contradicts the forecasts according to which the cost-of-life crisis and the growing mortgage rates were supposed to cause a downturn in the real estate market that had kept growing even during the pandemic and the previous financial recession.
House prices remain high despite the growing economic uncertainty, but surveys in this sector evidence lower expectations in most areas across the United Kingdom. The consumer demand is weakening and other forward-looking indicators also suggest a downtrend of the market activity, according to Kim Kinnaird, Director, Halifax Mortgages.
Mortgage rates are already the highest since 2016 after the Bank of England has raised them six times in half a year. In mid-September 2022, the rates are expected to increase by another half-point.
The annual rate of house price growth is 11.5%, which is almost identical to 11.8% recorded last month. Sales are the most active in London and Whales. The prices in the capital soared by 8.8% year-on-year – the greatest over the past six years. The 16.1% growth in Whales has also broken the 2005 record.
According to Robert Gardner, Chief Economist at Nationwide Building Society, a market slowdown should be expected due to another increase of the mortgage rate that has already grown significantly over the past months. So investors who are thinking of purchasing real estate in London should make haste.