PwC comments on the latest house price and inflation data

Jamie Durham, economist at PwC, comments on the latest UK house price data:

“This morning the ONS released its House Price Index for September. House prices in the UK grew by 4.7% on an annual basis and the average UK price reached an all-time high of £245,000, which is around £11,000 higher than last year.

“Price growth was relatively consistent across regions, with most posting growth of more than 4% over the year before. Average house prices in London reached a record high of £496,000, which is nearly £20,000 higher than in September 2019.

“This data is further evidence that there has been a sustained rebound in activity in the housing market since restrictions were lifted in May.

 “This is the first data release from the ONS that captures sales since the Stamp Duty holiday was introduced. The Stamp Duty holiday is clearly helping to boost activity in the market and support price growth. There are potentially significant savings to be made by purchasing a property while the Stamp Duty holiday is in place, and so some people may be bringing planned purchases forwards.

 “Looking ahead, the realistic prospect of a vaccine in the first part of 2021 along with the extension of the furlough scheme until the end of March may help to support demand and price growth over the coming year to an extent. However, there are still risks to the outlook, including considerable uncertainty in the economy and the potential for rising unemployment.”

 

Hannah Audino, economist at PwC, comments on today's inflation data:

"Consumer prices remain significantly below target at 0.9% in October, but saw a slight uptick in growth, up from 0.7% in September." 

"This small rise in the 12-month CPIH rate was mainly driven by an increase in prices for ‘clothing and footwear’. This reflects a return to usual price growth, following the discounting that occurred in March and April in response to the national lockdown. At the other end, ‘recreation and culture’ made the largest negative contribution to the inflation rate, reflecting reduced demand for foreign holidays and a lack of new cinema releases. Restaurants and hotels’ is the only category for which prices remain lower than they were a year ago, due to the continued effect of the temporary reduction in VAT." 

"The gradual increases in consumer prices could be temporarily cut short next month, as England’s second national lockdown in November restricts activity and demand for things like fuel. In the run up to Christmas, however, we could see a further pick up in household spending, which could put upwards pressure on prices." 

 

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