UK House Price Growth Hits Three-Year Low Amid Economic Uncertainty
Annual property value increase slows to 0.5% in October as rising mortgage costs and inflation weigh on borrower caution.
Sarah Connor
Annual house price growth has slowed to its weakest pace in nearly three years.
Market activity and house price growth have slowed in recent months. Borrower caution, driven by rising mortgage costs, contributes to this deceleration.
Geopolitical tensions remain high. The conflict in the Middle East pushes energy prices upward, fanning inflation concerns. This situation has led to mounting financial market expectations for bank rate increases, which maintain upward pressure on the market interest rates underpinning mortgage pricing.
More than a third of homes across the UK sit in postcode areas where property values have fallen over the past year. This proportion has surged significantly, from 12% a year ago to 35%.
In London and the South East, 85% of homes were in postcode areas experiencing price falls. Despite these regional declines, the average house price across the UK still stands 0.8% higher than a year earlier, at £273,100.
Consumer sentiment dipped noticeably in October. Households grew less confident about the outlook for the general economy and their own financial situation in the year ahead. Surveyors report new buyer inquiries remain weak, and forward-looking indicators suggest further softness in the near term.
However, the market could regain momentum once the energy shock fades. House prices are rising by more than 4% annually in postcode areas in Liverpool, Carlisle, and Kilmarnock.
Mortgage costs have increased due to expectations of upcoming interest rate rises as policymakers look to cool rising inflation caused by the Iran war. Rising inflation, caused by the Iran war, leads policymakers to consider interest rate rises.