PwC comments on September's house price data

Jamie Durham, economist at PwC comments on today's house price data: 

“Data released this morning shows that UK house prices rose by 10.6% in August 2021, up from 8.5% in July. This data shows that the housing market has clearly remained strong despite the end of the stamp duty holiday in June.

“The continued strong rate of price growth is driven by a number of factors, including a shift in mix to larger and more expensive properties, the accumulation of consumer savings during lockdowns over the last 18 months, and continued low interest rates.

“Price growth was strongest in the north of England. Given average prices in the North East and North West are under £200,000, many buyers will have continued to benefit from the reduced rate of stamp duty on properties up to £250,000 in place until the end of September, supporting price growth. 

“London remained the region with the slowest price growth for the ninth consecutive month, reflecting in part the already high cost to purchase in the capital. Despite this lower growth rate, prices still rose by £28,000 from the month before, with the average prices in the capital now nearly £526,000. 

“Looking ahead, we expect that house price growth will remain relatively buoyant, but likely at a slightly lower rate than we have seen over the last few months as a result of conditions normalising post-COVID-19 and weakening consumer confidence driven by inflation and ongoing stock issues. It is unlikely that there will be a significant decline in the rate of growth, however, as the underlying factors driving up the market should continue

“Inflation remains one risk to the outlook. While we expect the current price pressure to be temporary, the Bank of England may move to increase interest rates if there is evidence price growth may be sustained, which would then impact house price growth by limiting affordability. However, any such move by the Bank of England is unlikely to be imminent given the current drivers of inflation and would likely be small in the first instance, limiting the impact on the housing market over the coming months.”