Annual house price growth in double digits for fifth month in a row

A 20% deposit on a typical first-time buyer home is now around 113% of gross income, marking a record high, Nationwide Building Society said.

Vicky Shaw
Thursday 30 September 2021 07:49
Annual house price growth remained in double digits for the fifth month in a row in September, figures show (Gareth Fuller/PA)
Annual house price growth remained in double digits for the fifth month in a row in September, figures show (Gareth Fuller/PA)

Annual house price growth remained in double digits for the fifth month in a row in September despite a “modest slowdown”, according to an index.

Property values increased by 10% annually in September, easing back from 11% in August, according to Nationwide Building Society

Prices increased by just 0.1% month-on-month, taking the average UK house price to £248,742.

Wales and Northern Ireland were the strongest performing parts of the UK in the third quarter of 2021 while London was the weakest, Nationwide said.

Robert Gardner, Nationwide’s chief economist, said: “Annual house price growth remained in double digits for the fifth month in a row in September, though there was a modest slowdown to 10%, from 11% in August.

“House prices rose by 0.1% month-on-month, after taking account of seasonal effects. As a result, house prices remain (around) 13% higher than before the pandemic began in early 2020.”

The stamp duty threshold in England and Northern Ireland will return to normal levels from Friday October 1, after a holiday was temporarily put in place in 2020 and then tapered from July this year. There had been a flurry of activity in June as buyers rushed to maximise their tax discounts.

A 20% deposit on a typical first-time buyer home is now around 113% of gross income - a record high

Robert Gardner, Nationwide Building Society

Mr Gardner continued: “House prices have continued to rise more quickly than earnings in recent quarters, which means affordability is becoming more stretched.

“Raising a deposit remains the main barrier for most prospective first-time buyers. A 20% deposit on a typical first-time buyer home is now around 113% of gross income – a record high.

“Due to the historically low level of interest rates, the cost of servicing the typical mortgage is still well below the levels recorded in the run-up to the financial crisis. However, even on this measure, affordability is becoming more challenging.

“For example, if we look at typical mortgage payments relative to take-home pay across the country, it is notable that in the majority of UK regions (10 out of 13) this ratio is now above its long-run average. By contrast, pre-pandemic, this was only the case in one region (London).

“Recent price patterns suggest an element of rebalancing is occurring where most of the regions that have seen the strongest price growth are those in which affordability is still close to or below the long-run average.”

Mr Gardner said the outlook remains uncertain.

He added: “Activity is likely to soften for a period after the stamp duty holiday expires at the end of September, given the incentive for people to bring forward their purchases to avoid the additional tax.

“Moreover, underlying demand is likely to soften around the turn of the year if unemployment rises as Government support winds down, as seems likely.

“But this is far from assured. The labour market has remained remarkably resilient to date and, even if it does weaken, there is scope for shifts in housing preferences as a result of the pandemic – such as wanting more space or to relocate – to continue to support activity for some time yet.”

Here are average house prices in the third quarter of this year and the annual increase, according to Nationwide Building Society:

– Wales, £190,700, 15.3%

– Northern Ireland, £167,103, 14.3%

– Yorkshire and the Humber, £188,457, 12.3%

– Scotland, £171,134, 11.6%

– North West, £191,326, 11.4%

– North East, £147,358, 10.9%

– East Midlands, £215,284, 10.5%

– West Midlands, £220,558, 9.9%

– South West, £286,006, 9.9%

– Outer South East (includes Ashford, Basingstoke and Deane, Bedford, Braintree, Brighton and Hove, Canterbury, Colchester, Dover, Hastings, Lewes, Fareham, Isle of Wight, Maldon, Milton Keynes, New Forest, Oxford, Portsmouth, Southampton, Swale, Tendring, Thanet, Uttlesford, Winchester, Worthing) £320,050, 9.8%

– East Anglia, £260,109, 8.9%

– Outer Metropolitan (includes St Albans, Stevenage, Watford, Luton, Maidstone, Reading, Rochford, Rushmoor, Sevenoaks, Slough, Southend-on-Sea, Elmbridge, Epsom and Ewell, Guildford, Mole Valley, Reigate & Banstead, Runnymede, Spelthorne, Waverley, Woking, Tunbridge Wells, Windsor and Maidenhead, Wokingham) £402,317, 6.8%

– London, £500,980, 4.2%

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in