The latest ONS HPI figures have been published this morning and show:
- Average UK house prices increased by 12.6% over the year to October 2022, up from 9.9% in September 2022.
- However, the increase in the annual percentage change was partly caused by a sharp fall in UK average house prices in October 2021, following changes to Stamp Duty Land Tax.
- The average UK house price was £296,000 in October 2022, which is £33,000 higher than this time last year and little changed from last month.
“October’s figures show an increase in house price growth annually, but this is largely because the data compares against October 2021, when house prices uncharacteristically fell, against the overall growth trend at the time, because the pandemic SDLT holiday came to an end. After accounting for this slight statistical anomaly, it is clear that we have now entered a period of house price decline.
“Despite inflation showing signs of improvement today, which will be a hugely welcome sign for many households, cost of living pressures continue to affect demand in the housing market, as does the increased cost of borrowing, which could rise again on Thursday with the Bank of England set to make its next announcement on interest rates. While fiscal policy levers like the SDLT cut, energy bill support packages and measures to restore fiscal credibility and calm rate rises are preventing a housing market cliff edge, the strength of the macro-economic forces at play, combined with tax rises hitting people’s pay packets, will continue to limit demand, driving the trend of house price decline. Normal seasonal declines in market activity towards the end of 2022 will likely bring further news of falling house prices in future datasets.
“Counter intuitively, despite cost of living taking the heat out of the market, buyers, sellers and their advisors are waiting longer than ever to transact, all the while incurring extra costs in the due diligence process, especially as more and more transactions have been falling trough during a period of economic turbulence. These costs are coming at a time when transacting parties and their advisors all need to be finding savings, not spending more.
“As we move into a recessionary period and anticipate significant public sector spending cuts in years to come, the focus around affordability and housing market sustainability can’t just be about house prices and supply and demand dynamics; we need to also look at the rising cost of due diligence and the financial risk to businesses and individuals posed through inefficiencies in that process.
“As homeowners face falling valuations, buyers face affordability challenges and law firms struggle with rising costs, it is critical that we cut down on inefficiencies in the housing market to limit financial risk for everyone. We have the technology already to cut transaction times in half, but property businesses need to be progressive in their outlook, finding ways to invest in technology adoption to drive increased profitability and savings for their clients. Industry can’t control macro-economics or the impact of policy decisions on the market, but it can futureproof the market by taking brave investment decisions and driving the pace of innovation.”