Jamie Durham, economist at PwC UK, says:
“Data released this morning shows that the UK housing market remained buoyant in October, with double digit price growth on an annual basis despite the end of the stamp duty holiday in September. On a monthly basis prices fell slightly by around 1%, which is likely driven by the end of the stamp duty holiday.
“The capital once again saw the slowest price growth of all regions, with prices up 6.2% compared to the year before. London was, however, the only region where prices increased compared to September. This likely reflects the fact that the tapered stamp duty holiday, which ended in September, was more of a benefit to buyers outside of London where average prices are lower.
“The continued strong rate of price growth across the country is driven by a number of factors, including the accumulation of consumer savings during lockdowns over the last 18 months, the imbalance of supply and demand, and continued low interest rates. These factors are likely to continue to support the market going forward.
“The most significant risk to the outlook remains inflation. Figures also published this morning show inflation reached 4.6% in November. While high inflation is still broadly expected to be temporary, the Bank of England has indicated that interest rates are likely to rise. This could pass through to house prices in two ways. Higher inflation may impact consumer confidence, and limit their willingness to make major financial decisions like buying a house, while higher interest rates are likely to impact affordability, which may also reduce demand.”
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