House prices increased 13.6 per cent in August according to official figures, as experts predict the average price could reach £300,000 despite economic uncertainty.
Across the UK the average house price is now £295,903, up 0.9 per cent from July, according to the Office for National Statistics.
The rate of house price inflation slowed from July when the figure was up 16 per cent from the year before.
The number of homes for sale has also risen 50 per cent since April, according to estate agent membership body Propertymark.
Slower growth: House prices rose 13.6% in August, down from July when they increased 16% year-on-year according to the ONS
Iain McKenzie, chief executive of The Guild of Property Professionals, said: ‘You would be forgiven for assuming that the political and economic turbulence we have seen over the past few months would be having a bigger and more immediate impact on house prices.
‘The reality is that house prices are dependent on a variety of factors, including the supply and demand on housing, and the effects are often slow to set in.
‘These figures show that there is a slight cooling in year-on-year growth, but it’s far from being a blizzard.’
He added that the property market had been reassured by the fact that the stamp duty changes announced in the mini-Budget are were of the few policies not subject to a U-turn in recent days.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: ‘The slightly historic nature of these comprehensive figures demonstrates the strength in the housing market before it hit the buffers at the end of September.
‘Since then, activity has slowed and prices have softened a little but there is still plenty of pent-up demand, not least to take advantage of favourable existing mortgage rates before they rise even higher.’
However, since the former Chancellor’s mini-Budget last month mortgage rates have been rising rapidly.
Earlier this week the average fixed rate for a two-year fixed mortgage across all loan-to-values has climbed to 6.53 per cent, the day after new Chancellor Jeremy Hunt rowed back on much of the Government’s package of tax cuts.
The average rate for five-year fixed deals also increased to 6.36 per cent, despite dipping slightly to below 6.30 per cent at the end of last week, according to the financial information service Moneyfacts.
The last time the average two-year fixed rate mortgage hit 6.4 per cent or more was back in August 2008 during the fallout from the global financial crash when it reached 6.94 per cent.
Those who need a new mortgage can access up-to-the-minute rates based on their own circumstances using This is Money’s mortgage calculator.
Interest increase: The price of fixed rate deals has continued to climb since the end of last year, but this has accelerated since the Government’s mini-Budget
More homes coming on to the market
Propertymark’s figures show that since April, the number of homes for sale per estate agent branch has risen from 20 to 30. This is the highest level since March 2021 when it sat at 31 per member branch.
It has been reported today that inflation was at 10.1 per cent in September, but despite rising interest rates and cost of living increases Propertymark said there was still demand to move.
The number of buyers registered with each branch also increased.
However, agents reported that since April over half of sales (52 per cent) have completed below the asking price, suggesting that some of the heat is coming out of the market.
Since April, the number of homes for sale per Propertymark member estate agent branch has risen from 20 to 30 — an increase of 50%
The increase in housing stock on the market has meant supply and demand has started to rebalance after a period of high demand that has contributed to the ongoing increase in house prices despite the tumultuous conditions.
However, 48 per cent of properties are still completing on or above asking price meaning there is still a way to go to reach pre-pandemic levels. Between 2015 and 2020, 78 per cent of sales were below the asking price.
Nathan Emerson, Propertymark CEO, said: ‘Over August and September, we have seen an increase in people wanting to get their homes valued and sold. This is great news for buyers who have missed out previously.
‘With the economic climate changing, sellers will need to be realistic about the prices they might achieve, but as most people move every 15 years or so they are still seeing a considerable lift in value from what they would have paid.’
What to do if you need a mortgage
Borrowers who need to find a mortgage because their current fixed rate deal is coming to an end, or because they have agreed a house purchase, have been urged to act but not to panic.
Banks and building societies are still lending and mortgages are still on offer with applications being accepted.
Rates are changing rapidly, however, and there is no guarantee that deals will last and not be replaced with mortgages charging higher rates.
This is Money’s best mortgage rates calculator powered by L&C can show you deals that match your mortgage and property value
What if I need to remortgage?
Borrowers should compare rates and speak to a mortgage broker and be prepared to act to secure a rate.
Anyone with a fixed rate deal ending within the next six to nine months, should look into how much it would cost them to remortgage now – and consider locking into a new deal.
Most mortgage deals allow fees to be added the loan and they are then only charged when it is taken out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.
What if I am buying a home?
Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be.
Home buyers should beware overstretching themselves and be prepared for the possibility that house prices may fall from their current high levels, due to higher mortgage rates limiting people’s borrowing ability.
How to compare mortgage costs
The best way to compare mortgage costs and find the right deal for you is to speak to a good broker.
You can use our best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.
Be aware that rates can change quickly, however, and so the advice is that if you need a mortgage to compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you.
> Check the best fixed rate mortgages you could apply for