House prices in August 2022 were 11.5% higher than the same month a year earlier, the latest Halifax house price index shows.

Residential property prices increased by 0.4% in August, compared with a month earlier, but the annual rate of growth eased from 11.8% in July.

A typical UK property now costs a record £294,260, while it is Wales that is still showing the strongest annual growth in the UK.

Wales remains at to the top of the table for annual house price inflation, up by 16.1%, the strongest level of growth since early 2005. This means average prices have risen by £31,246 over the last year, with an average property now costing £224,858.

The South West of England also continues to record a strong rate of annual growth, up by +14.5%, with an average property cost of £313,003.

The rate of annual growth in Northern Ireland eased back further last month to +12.5%, with a typical home now costing £185,505.

Scotland also saw another slowdown in the rate of annual house price inflation, to 9.4% from 9.5%. A Scottish home now costs an average of £204,362, another record high for the nation.

While London has continued to lag behind other nations and regions, the rate of annual house price inflation in London rose again to now stand at 8.8%, its highest level in over six years. With a typical property costing a record £554,718 the capital’s average house price has risen by £44,669 over the last 12 months

Km Kinnaird, director, Halifax Mortgages, said: “The slight fall seen in average house prices in July was offset by a return to growth during August – although the increase was relatively modest compared to the rapid inflation we’ve witnessed in recent times. Over the last year the rate of monthly house price inflation has averaged around 0.9%.

“The typical house price reached another record high in August – as it has done in seven out of the eight months so far this year. However, the annual rate of growth dropped to 11.5%, from 11.8% in July, the lowest level in three months.

“While house prices have so far proved to be resilient in the face of growing economic uncertainty, industry surveys point towards cooling expectations across the majority of UK regions, as buyer demand eases, and other forward-looking indicators also imply a likely slowdown in market activity.

“Firstly, there is the considerable hit to people’s incomes from the cost-of-living squeeze. The 80% rise in the energy price cap for October will put more pressure on household finances, as will the further increases expected for January and April. At the levels being predicted, this is likely to constrain the amounts that prospective homebuyers can afford to borrow, on top of the adverse impact of higher energy prices on the wider economy.

“While government policy intervention may counter some of these impacts, borrowing costs are also likely to continue to rise, as the Bank of England is widely expected to continue raising interest rates into next year.

“With house price to income affordability ratios already historically high, a more challenging period for house prices should be expected. However, this should be viewed in the context of the exceptional growth witnessed in recent years, with average house prices having increased by more than £30,000 over the last 12 months alone.”

Industry reaction following the release of the Halifax HPI this morning:

Nathan Emerson, CEO of Propertymark, commented: “Pre-pandemic seasonal trends are re-emerging as a summer lull continues within the market. However, buyer confidence remains strong pushing up the average time to sell to record breaking levels at over four months.

“The wider economic climate and rising energy costs have meant that buyers are negotiating harder and more and more buyers each month are starting to secure homes under the asking price.

“The number of properties coming the market is fairly static and interest rates remain at a historically low level despite recent rises so we anticipate that house prices will continue to slow in growth month on month but won’t drop significantly before the end of the year.”

Propertymark’s latest monthly Housing Market Report highlights:

• 41% of member branches report in July that the average time from offer accepted to exchanging contracts was now over 17 weeks.
• 62 new homebuyers registered per member branch in July.
• Nine new properties advertised for sale per member branch.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Although we’ve noticed at the sharp end prices and activity has softened a little, market resilience continues to defy almost daily predictions of a slump.

“Worries about the rising cost of living, successive interest rate rises and possibility of recession next year have not been sufficient to prompt a correction while such a significant mismatch between demand and supply remains, although prices may be more sensitive.”

Tomer Aboody, director of property lender MT Finance, commented: “As the rate of house price growth slows, we are seeing clear signs of a market that is cooling. Buyers are still active and looking to purchase but are now more selective and calculated in their offers, taking into consideration higher mortgage rates, higher inflation and higher energy costs. Sales are happening but at a slower pace.

“As the market continues to take shape going forward, a possible government intervention is needed to restructure stamp study, allowing and helping buyers to get on the ladder and reducing the pain of higher mortgage rates a little.”

Tom Bill, head of UK residential research at Knight Frank, commented: “The supply of houses tightened over the summer as more people took a summer holiday for the first time in three years, which kept prices buoyant. We expect more properties to be listed in the coming weeks as we move from a seller’s towards a buyer’s market. Together with rising mortgage rates, this will increase downwards pressure on prices after they have appeared to defy gravity for so long.”

Matthew Thompson, Head of Sales at Chestertons, said: “Despite increasing interest rates and the cost of living crisis, August remained an incredibly busy month for London’s property market. The number of buyer enquiries alone has risen by 35% compared to August last year.”

“London’s housing market is underpinned by a chronic shortage of property and an increasing population which has surpassed the nine million mark. To house this amount of people, the capital only has 3.6million dwellings which cannot change by much as there is limited land to build on. The population however will continue to grow and boost demand further.”

“One driving force behind the demand for homes is the return of professionals who are looking for a property closer to work. We are witnessing this at our Canary Wharf and Hyde Park branches in particular but also across some of London’s commuter hotspots such as Islington.”

Iain McKenzie, CEO of The Guild of Property Professionals, commented: “House prices returned to business as usual after their tiny dip last month, but there can be no ignoring the growing signs that the market is calming down.

“Demand is slowly easing in most parts of the country as soaring inflation and rising interest rates start to turn the screw on consumers and the economy.

“That is not the case in the capital, where housing continues to see unprecedented growth in prices, in a market that was already unaffordable for many. The highest annual house price inflation in six years in London reflects the sense of back to business, reversing the years of employees moving out of cities during the pandemic.

“All eyes will be on the property market in the coming months to see how rising household bills affect both house prices and the demand to move.

“As we have seen in the past, there is still demand during periods of economic troubles, with around half of buyers having to move because their living situation changes. This demand may well keep prices buoyant for the rest of the year.”