The price of a typical UK house has exceeded a quarter of a million pounds for the first time, according to an index.
The average house price in October was Â£ 250,311, marking an annual increase of 9.9% and a 0.7% increase month-over-month, the Nationwide Building Society said.
Robert Gardner, Nationwide Chief Economist, said: ‘The price of a typical UK house has now passed the Â£ 250,000 mark, an increase of Â£ 30,728 since the pandemic struck in March 2020 . “
Mr Gardner said housing demand remained strong, despite the stamp duty holiday expiring at the end of September.
He continued: âIndeed, mortgage applications remained strong at 72,645 in September, more than 10% above the monthly average recorded in 2019. Combined with a lack of housing in the market, this is contributing. to explain why price growth has remained robust.
âThe outlook remains extremely uncertain. If the labor market remains resilient, conditions could remain fairly favorable over the next few months, especially as the market continues to gain momentum and it is possible that changes underway in housing preferences in the near future. the aftermath of the pandemic continue to support activity.
âHowever, a number of factors suggest that the pace of activity could slow down. It is still unclear how the economy as a whole will react to the withdrawal of government support measures.
“Consumer confidence has weakened in recent months, in part due to a sharp increase in the cost of living.”
Mr Gardner said there had been growing speculation that the Bank of England would raise interest rates in the coming months.
He said: âInvestors expect the bank rate to be increased from its current record low of 0.1% before the end of the year – most likely 0.25% or 0 , 5% – and maybe 1% within a year, although markets expect it to stay near that level in five years.
âProvided the economy does not weaken significantly, the impact of a limited hike in interest rates on UK households will likely be modest. Part of the reason is that only a relatively small proportion of borrowers will be directly affected by any change.
âMost loans on personal loans and credit cards are fixed rate or tend not to be affected by fluctuations in the bank rate. Likewise, the vast majority of new mortgages have been extended at fixed interest rates in recent years. “
He said that a rate hike of 0.4 percentage point to 0.5% “is likely to have a modest impact on most borrowers who use variable rates.”
Data from the UK Housing Survey showed that in 2019, around 10% of homeowners spent more than 30% of their gross income on their mortgage each month.
âFor example, on an average mortgage, an interest rate hike of 0.4% would increase monthly payments from Â£ 28 to Â£ 625 (or about an additional Â£ 335 per year), although an increase in the rate d The 1% discount would see typical payments disappear. a more substantial amount of Â£ 64 to Â£ 660 (over Â£ 760 per year approximately).
He added: âIt is important to note that a small proportion of households already have a relatively high debt service burden.
âFor example, data from the English Housing Survey showed that in 2019, around 10% of homeowners spent more than 30% of their gross income on their mortgage each month.
âFor these households, some of whom will benefit from variable rates, any rate hike will be difficult, especially given the broader rise in the cost of living, even though the impact on the wider economy and most household will likely be modest. “