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PwC comments on ONS September house price figures

17 Nov 2021

Jamie Durham, economist at PwC UK, says:

“Data released this morning shows that UK house prices increased by 11.8% in the year to September 2021, up from 10.2% in August. This data clearly shows that the housing market has remained strong despite the end of the stamp duty holiday in June.

"The continued strong rate of price growth across the country is driven by a number of factors, including a shift to buying larger and more expensive properties, the accumulation of consumer savings during lockdowns over the last 18 months, the imbalance of supply and demand, and continued low interest rates.

"London’s performance, however, stands out most. Prices increased by only 2.8%, which is significantly below the rest of the country. This makes London the slowest growing region for the 10th consecutive month. This slower growth reflects in part the already high cost to purchase in the capital. The tapered stamp duty holiday, in place until the end of September, is also likely to have primarily benefited regions outside of the capital and may explain some difference in performance.

"These factors driving the market over the last year are likely to continue to support price rises going forward, although the high rates of growth we've seen for much of this year may be tempered as conditions normalise post-COVID-19.

"The most significant risk to the outlook remains inflation. Figures also published this morning show inflation reached 4.2% in October. 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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David Bowden

David Bowden

Manager, Corporate Affairs, PwC United Kingdom

Tel: +44 (0)7483 365049

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