PwC comments on latest ONS house price figures

Commenting on the latest ONS house price data, Barret Kupelian, Chief Economist at PwC UK, says:

“House prices continue to adjust to the impact of tighter financial conditions, contracting by around 1.2% on a year-on-year basis across the UK. 

“However, events in the past few days have shown that Christmas has come early. The Federal Reserve’s dovish pivot, the better than expected news on UK inflation, and the more positive outlook for natural gas futures in Europe all mean that market rates are expected to price in future interest rate cuts earlier. If the streak of good news persists, this will flow through to mortgage rates sooner, potentially helping out first time buyers and those who are due to remortgage next year.

“The news for those renting is not so positive with the latest data showing rents growing at a record pace of 6.2% across the UK. Some of this is being fuelled by higher earnings in the labour market, leading to higher demand, while supply is marginally dropping as some landlords consolidate their portfolios. For 2024, we expect rental growth to moderate as the labour market and earnings, in particular, start to cool. However we still think that rental growth will remain above historic rates for most of next year.”